You must report savings account interest as income, but not the account balance itself
The IRS requires you to report interest earned on a savings account as taxable income on your federal tax return. The account balance — the money you deposited — stays yours and is not taxed. Only the interest the bank pays you counts as income. If your savings account earned any interest during the year, that amount must be reported, regardless of how small it is.
Your bank will send you a Form 1099-INT in January or early February if your account earned $10 or more in interest during the previous year. If you earned less than $10, the bank is not required to send the form, but you still have to report the interest on your tax return if you file one.
The threshold of $10 is a reporting requirement for the bank, not a threshold for you. Even $1 in interest technically should be reported, though in practice the IRS focuses enforcement on larger amounts. If you have multiple savings accounts at different banks, each bank reports separately, and you add all the interest together on your return.
Key Takeaways
- Interest earned on savings accounts is taxable income and must be reported on your federal tax return, even if the amount is small.
- Banks send Form 1099-INT only when interest reaches $10 or more, but you report all interest you earned regardless of whether you receive the form.
- The money you deposited into savings is not taxed — only the interest the bank paid you is taxable income.
- Interest from savings accounts is reported on Schedule 1 (Form 1040) or directly on your tax return depending on your filing method and total income.
- If you earned interest but did not receive a 1099-INT, contact your bank for a corrected form or use your account statements to calculate the amount owed.
How banks report savings account interest to the IRS
Your bank tracks interest paid to your account throughout the year and reports it to the IRS on Form 1099-INT. The bank sends you a copy and files another copy with the IRS under your Social Security number or Tax ID. This form shows the exact dollar amount of interest you earned.
The $10 threshold means banks do not have to issue a 1099-INT if interest was under that amount. However, the IRS still expects you to report it. If you earned $8 in interest and received no form, you look at your account statements, find the interest total, and report it yourself when you file.
Banks typically mail 1099-INT forms by January 31. If you do not receive one by early February and your account earned interest, contact your bank and ask for a copy. You will need it to file accurately, and the bank can reissue it or provide a statement showing the interest earned.
Where to report savings account interest on your tax return
Interest income goes on Schedule 1 (Form 1040) under "Interest" if you are filing a federal return. If you use tax software, you enter the amount from your 1099-INT, and the software places it in the correct location automatically. If you file by paper, you write the interest amount on the line labeled "Interest" on Schedule 1 and attach it to your Form 1040.
The interest is added to your other income and taxed at your ordinary income tax rate. If you have a small savings account with minimal interest, this might not change your tax bill much. If you have a high-yield savings account or a large balance, the interest can be significant and may push you into a higher tax bracket.
Some people use tax software that walks through the process step by step. Others work with a tax preparer who handles the reporting. Either way, the 1099-INT is the document that drives the entry — you report what the form says you earned.
What happens if you do not report savings account interest
The IRS receives a copy of every 1099-INT your bank files. If you do not report the interest on your return, the IRS will notice the discrepancy when it matches your return against the forms it received from banks. This mismatch can trigger a notice asking you to explain the difference or pay additional tax plus penalties and interest.
Small amounts of unreported interest rarely result in enforcement action, but the IRS has automated systems that flag mismatches. If you earned $50 in interest and did not report it, you might receive a letter. If you earned $500 and omitted it, the IRS is more likely to pursue it.
The safest approach is to report all interest, even small amounts. It takes minutes to add to your return, and it keeps you in compliance. If you made a mistake in a prior year, you can file an amended return (Form 1040-X) to correct it.
Savings accounts and the standard deduction
Reporting interest income does not prevent you from taking the standard deduction. The standard deduction is a flat amount you can subtract from your total income before calculating tax. Interest is added to your income first, then the standard deduction is applied.
For example, if you earned $500 in interest and your standard deduction is $13,850 (2023 single filer), your taxable income would be $500 minus $13,850, which results in zero taxable income. You would owe no federal income tax. However, you still have to file and report the interest to be in compliance.
If your total income (including interest) is below the standard deduction for your filing status, you may not owe tax, but you should still file if you had taxes withheld or if you are may have access to to refundable credits like the Earned Income Tax Credit.
High-yield savings accounts and tax reporting
High-yield savings accounts pay significantly more interest than traditional savings accounts — sometimes 4% to 5% annually compared to 0.01% at a regular bank. This higher interest means more income to report on your taxes, but the reporting process is identical. Your bank still sends a 1099-INT, and you report it the same way.
If you have $10,000 in a high-yield account earning 4.5% annually, you would earn $450 in interest. That $450 is taxable income and must be reported. At a 22% tax bracket, that interest would result in about $99 in federal tax owed. This is one reason some people move money to high-yield accounts only when they do not need the funds for immediate expenses.
The tax impact of high-yield savings is straightforward but worth calculating before you move money. Use your expected tax bracket to estimate what the interest will cost you in taxes, then decide whether the after-tax return is worth it compared to keeping money in a lower-interest account or investing it elsewhere.
If you earned interest but received no 1099-INT form
If your account earned interest but you did not receive a 1099-INT by mid-February, contact your bank first. Ask whether the interest fell below the $10 reporting threshold or whether the form was mailed to an outdated address. The bank can reissue the form or provide a statement showing the interest earned.
If the bank confirms you earned interest below $10 and will not issue a form, use your account statements to calculate the total. Add up all the interest deposits shown in your statements for the year and report that amount on your return. Keep the statements as documentation in case the IRS asks questions later.
If you switched banks during the year, you may receive multiple 1099-INT forms — one from each bank. Add all the interest amounts together and report the total on your return. The IRS will receive copies from each bank, so your return should match the combined total.
Frequently Asked Questions
Do I have to report interest if I earned less than $10?
Technically yes, though banks do not send a 1099-INT for amounts under $10. If you earned $5 in interest, you should report it on your return. In practice, the IRS focuses on larger amounts, but reporting it keeps you in full compliance. Use your bank statements to calculate the exact amount.
Is the money I deposited into savings taxed?
No. Only the interest the bank paid you is taxable. The principal — the money you put in — is yours and was already taxed when you earned it as income. Withdrawals from savings are not taxed either. Only new interest counts as income.
What if I have savings accounts at multiple banks?
Each bank sends a separate 1099-INT for interest earned at that bank. You add all the interest amounts together and report the total on your return. The IRS receives copies from each bank, so your return should show the combined total of all interest earned across all accounts.
Can I deduct savings account fees from the interest I report?
No. You report the full interest amount shown on the 1099-INT. Fees charged by the bank are not deductible against interest income. However, if you paid investment advisory fees or other may have access to expenses, those may be deductible under other rules — consult a tax preparer for your specific situation.
What if my bank made an error on the 1099-INT?
Contact your bank immediately and ask for a corrected form (marked as a correction). The bank will issue a corrected 1099-INT and file a corrected copy with the IRS. Use the corrected form when you file your return. If you already filed with the incorrect amount, you can file an amended return once you receive the correction.