You must report savings account interest on your tax return if you earned more than $10 in interest during the year, but the bank reports it to the IRS on a Form 1099-INT whether you file or not.
The IRS requires you to report all interest income, including savings account interest, on your federal tax return. However, there is a reporting threshold: if you earned $10 or less in interest during the tax year, you do not have to report it. Banks send a Form 1099-INT to both you and the IRS when interest exceeds $10, so the IRS already knows about the income even if you do not report it yourself.
The requirement to report applies to every type of savings account—traditional savings, money market accounts, certificates of deposit (CDs), and high-yield savings accounts. Interest is taxed as ordinary income at your regular tax rate, not at a capital gains rate. This means the tax you owe depends on your total income and tax bracket for the year.
Key Takeaways
- You must report savings account interest over $10 on your tax return, even if the bank does not send you a Form 1099-INT.
- The bank reports interest to the IRS on Form 1099-INT, so the IRS knows about the income whether you report it or not.
- Interest is taxed as ordinary income at your regular tax rate, not as a capital gain.
- If you earned $10 or less in interest during the year, you do not have to report it, but reporting it does not hurt.
- You report savings interest on Schedule 1 (Form 1040) or on your tax software's interest income section.
When the bank sends you a Form 1099-INT
Banks mail Form 1099-INT by January 31 each year for interest paid during the previous calendar year. You receive Copy B, and the bank sends Copy A to the IRS. The form shows the account number, the bank's name and tax ID, and the total interest paid.
If you have multiple savings accounts at different banks, you will receive a separate 1099-INT from each one. If you have multiple accounts at the same bank, the bank may combine the interest on a single form or issue separate forms depending on how the accounts are registered (individual, joint, trust, etc.).
The $10 threshold is per payer, not total. If you earned $8 in interest from one bank and $5 from another, neither bank is required to send a 1099-INT, but you still owe tax on the $13 total if you file a return.
How to report savings interest on your tax return
You report savings account interest on Schedule 1 (Form 1040), which is part of the main federal tax return. On the form, you list the name of each payer (the bank) and the amount of interest from each one. If you use tax software, the program walks you through an interest income section and transfers the total to the correct line on your return.
If you received a 1099-INT, match the amount on the form to what you report on your return. If the amounts do not match, the IRS will notice the discrepancy when it receives the bank's copy. If you earned interest but did not receive a 1099-INT (because it was under $10 or the bank made an error), you still report it—use your bank statement as proof.
The interest amount goes into your total income for the year, which determines your tax bracket and whether you owe tax. Even if you do not owe tax overall, you may still need to file a return to report the interest income.
Whether you have to file a return at all
You must file a federal tax return if your total income exceeds the standard deduction for your filing status and age. The standard deduction changes each year—for 2024, it is $14,600 for single filers under 65 and $29,200 for married couples filing jointly under 65. Savings account interest counts toward this total.
If your only income is $5,000 in savings interest and you are single and under 65, you do not have to file because $5,000 is below the $14,600 standard deduction. But if you earned $15,000 in interest, you must file because you exceed the threshold.
Some people file even when they do not have to, because they paid taxes through withholding or they want to claim a refundable tax credit. If you are unsure whether you must file, the IRS provides an interactive tool on its website to help you decide.
What happens if you do not report savings interest
The IRS receives a copy of every 1099-INT the bank sends to you. If you do not report the interest on your return and the amount exceeds $10, the IRS will likely catch the discrepancy when it matches your return to the 1099-INT. The IRS may send you a notice asking you to explain the difference or may simply assess the tax you owe plus interest and penalties.
Penalties for not reporting income range from 20 percent of the unpaid tax (accuracy-related penalty) to 75 percent (fraud penalty) if the IRS determines the omission was intentional. Interest accrues on the unpaid tax from the original due date until you pay. Even small amounts of unreported interest can trigger a notice, which costs time and money to resolve.
If you made an honest mistake, you can file an amended return (Form 1040-X) to report the interest. Filing an amendment before the IRS contacts you may reduce or eliminate penalties.
Interest from joint accounts and accounts held in trust
If you own a savings account jointly with another person, the bank reports the full interest amount on a single 1099-INT. You and the joint owner must decide how to split the interest for tax purposes. If you each own half the account and contributed equally, you each report half the interest. If one person contributed more, you may split it differently, but you must both agree and keep records to support your split.
If you hold a savings account in a revocable living trust, the interest is still reported in your name and you report it on your personal return. If the account is in an irrevocable trust or a trust for a minor, the trust itself may have to file a return and report the interest, depending on the trust's structure and income level. Consult a tax professional if you are unsure how to report interest from a trust account.
Savings interest and other tax situations
If you are claimed as a dependent on someone else's return, you still have to report your own savings interest income. Your parents or guardians do not report it for you. However, if your total income (including the interest) is below the standard deduction, you may not have to file your own return.
If you are self-employed or have business income, savings interest is separate from business income and does not affect your self-employment tax. You report it on Schedule 1 along with any other non-business income.
If you earned interest in a tax-advantaged account like a Roth IRA or 529 college savings plan, you do not report that interest on your personal return. The account itself is not taxed on the interest earned inside it. You only report distributions from these accounts if they are taxable.
Frequently Asked Questions
Do I have to report interest if I earned less than $10?
No, you do not have to report interest of $10 or less. However, if your total income from all sources exceeds the standard deduction, you must file a return anyway and can choose to report the interest if you want.
What if the 1099-INT shows the wrong amount?
Contact the bank immediately and ask them to issue a corrected 1099-INT. The bank will send a corrected form to you and the IRS. Report the corrected amount on your return. If you already filed, you may need to file an amended return.
Can I deduct expenses against savings interest?
No, you cannot deduct investment expenses or account fees against interest income on your personal return. Interest is reported as gross income with no deductions allowed.
Do I report interest from a money market account the same way as a savings account?
Yes, money market account interest is reported the same way as savings account interest. The bank sends a 1099-INT and you report it on Schedule 1.
What if I moved money between savings accounts during the year?
Moving money between accounts does not change how you report interest. You report all interest earned from all accounts you owned during the year, regardless of when you opened or closed them.