You must report savings account interest on your tax return if you earned $10 or more in a year
The IRS requires you to report interest income from any savings account, money market account, or certificate of deposit (CD) on your federal tax return. The threshold is $10 — if your account earned $10 or more in interest during the tax year, you report it. If you earned less than $10, you do not have to report it, though you may choose to.
Your bank sends you a Form 1099-INT in January or early February showing the interest you earned. This form goes to the IRS at the same time it goes to you, so they already know about the income. Failing to report it creates a mismatch between what you reported and what the bank reported, which can trigger an audit notice.
The interest itself is taxed as ordinary income at your regular tax rate. You cannot deduct the interest you earned — you pay tax on the full amount. The only exception is interest from certain U.S. savings bonds, which may be tax-free if used for education, but regular savings accounts do not may have access to.
Key Takeaways
- Report savings account interest on your tax return if you earned $10 or more in a single tax year.
- Your bank sends you a Form 1099-INT showing the interest earned, and the IRS receives a copy automatically.
- Interest income is taxed at your regular income tax rate and cannot be deducted.
- If you earned less than $10 in interest, you are not required to report it, but reporting it does not hurt.
- Joint accounts require both owners to report their share of the interest based on ownership percentage.
How the IRS knows about your savings account interest
Banks are required by law to report interest payments to the IRS on Form 1099-INT. Your bank generates this form automatically based on the interest posted to your account during the calendar year. You receive a copy by mail or electronically, usually by January 31, and the IRS receives its copy at the same time.
Because the IRS already has this information, they cross-check it against what you report on your tax return. If you do not report the interest and the amount is $10 or more, the IRS computer system flags the discrepancy. This does not automatically trigger an audit, but it can result in a notice asking you to explain the difference or pay additional tax plus penalties.
Even if you did not receive a 1099-INT because the interest was under $10, the IRS still has access to your account information through bank reporting systems. Reporting the interest voluntarily, even when not required, keeps your return clean and avoids any questions later.
Where to report savings account interest on your tax return
On the federal Form 1040, savings account interest goes on Schedule 1, Part I, line 8 (labeled "Interest"). You add up all interest from all sources — savings accounts, CDs, money market accounts, bonds — and enter the total on that line. If you have only one account with interest under $1,500, you can report it directly on line 8 without filing Schedule B.
If your total interest income is $1,500 or more, you must file Schedule B (Interest and Ordinary Dividends) instead. Schedule B requires you to list each account separately with the amount of interest from each one. You then transfer the total to Schedule 1, line 8.
The interest amount comes directly from the 1099-INT your bank sent you. You do not calculate it yourself — you use the figure in box 1 of the form. If you have multiple accounts at different banks, you receive a separate 1099-INT from each bank, and you add them all together for your tax return.
Joint savings accounts and tax reporting
If you own a savings account jointly with another person, both of you are responsible for reporting your share of the interest. The bank reports the full interest amount on a 1099-INT, but it does not automatically split it between owners. You and the other owner must decide how to divide it based on your ownership percentage.
If you own the account 50-50, you each report 50 percent of the interest. If one person owns 75 percent and the other owns 25 percent, those are the percentages you use. The bank does not enforce this split — it is up to you and the other owner to report correctly. If you disagree on the split, you should resolve it before filing your return.
Some banks allow you to designate which owner receives the 1099-INT. If your bank does this, only one of you receives the form, but both of you are still responsible for reporting your actual share. The person who receives the form should share the interest amount with the other owner so they can report their portion.
What happens if you do not report savings account interest
If you earned $10 or more in interest and did not report it, the IRS will eventually notice the mismatch between what the bank reported and what you reported on your return. This typically results in a notice called a CP2000 (Underreported Income), which asks you to either agree with the IRS calculation or explain why you did not report the interest.
If you agree or do not respond, you owe the additional tax on the unreported interest plus interest on that tax (calculated from the original due date) and a penalty. The penalty for negligence is typically 20 percent of the underpaid tax. If the IRS determines the omission was intentional, the penalty can be higher.
The good news is that interest income is usually small enough that the additional tax and penalties are manageable. An amended return (Form 1040-X) filed before the IRS sends a notice allows you to report the interest and pay what you owe without penalties in most cases. If you receive a notice, you can still file an amended return and request penalty relief, though the IRS does not always grant it.
Savings accounts with very small interest amounts
If your savings account earned less than $10 in interest during the year, you are not required to report it. This threshold applies to each tax year separately — if you earned $8 in 2023 and $7 in 2024, you do not report either year. If you earned $12 in 2024, you report only that year.
Your bank will not send you a 1099-INT if the interest is under $10, so you will not receive a form to report. However, the IRS still has a record of the interest through the bank's internal reporting systems. Reporting it anyway does not hurt and may prevent confusion if the IRS ever reviews your account.
Some people choose to report very small interest amounts to keep their tax return complete and accurate, even though it is not required. Others skip it to keep their return simple. Either approach is acceptable as long as the amount is genuinely under $10.
Special situations: IRAs, CDs, and other accounts
Interest earned inside a traditional IRA is not reported on your tax return in the year it is earned — it grows tax-deferred until you withdraw it. When you withdraw money from a traditional IRA, that withdrawal is taxable, but the interest itself is not separately reported. Roth IRA interest is never taxed, so you do not report it at all.
CDs follow the same reporting rule as savings accounts: if you earned $10 or more in interest, you report it on your tax return. The bank sends you a 1099-INT for CD interest just as it does for savings account interest. If you cashed in a CD before maturity and paid an early withdrawal penalty, that penalty can be deducted as an adjustment to income on Schedule 1, line 21.
High-yield savings accounts, money market accounts, and sweep accounts all generate 1099-INT forms and must be reported the same way as regular savings accounts. The interest rate does not matter — whether you earned 0.01 percent or 5 percent, the reporting requirement is the same: report it if it is $10 or more.
Frequently Asked Questions
Do I have to report interest if I did not receive a 1099-INT?
If you earned $10 or more in interest, you should report it even if you did not receive a 1099-INT. The bank may have mailed it to an old address or made an error. Contact your bank to request a copy. If the interest was under $10, you are not required to report it.
What if my 1099-INT shows the wrong amount?
Contact your bank immediately to report the error. The bank will issue a corrected 1099-INT (marked as a correction) and send it to both you and the IRS. Report the corrected amount on your tax return. Keep documentation of the correction in case the IRS questions the discrepancy.
Can I deduct the interest I earned?
No. Interest income is taxable, and you cannot deduct it. You report the full amount as income. The only deduction related to savings accounts is an early withdrawal penalty if you cashed in a CD before maturity, which goes on Schedule 1, line 21.
Do I report interest if I am claimed as a dependent?
Yes. Even if someone else claims you as a dependent, you must report your own interest income on your tax return if it is $10 or more. Your parent or guardian cannot report your interest income on their return — it belongs on your return.
What if I earned interest in multiple accounts at the same bank?
Your bank combines all interest from all your accounts into a single 1099-INT. You add up the total interest and report it on one line of your tax return. You do not need to list each account separately unless your total interest is $1,500 or more, in which case you file Schedule B.