You report savings account interest if it totals $10 or more in a year
The IRS requires you to report interest earned in a savings account only when that interest reaches $10 or more during a single tax year. Your bank will send you a form called a 1099-INT in January or early February if you crossed that threshold. If you earned less than $10, you do not receive a 1099-INT and do not report it — though you are technically allowed to report it anyway if you want to.
The $10 threshold applies to the total interest from all your accounts at that bank combined. If you have two savings accounts at the same bank and earn $6 in one and $5 in the other, that is $11 total, so you will receive a 1099-INT. If you have accounts at different banks, each bank tracks its own interest separately and sends its own 1099-INT only if that bank's total hits $10.
Interest is the money the bank pays you for letting them use your money. It is different from the principal — the amount you deposited. You only report the interest portion, not your original deposit.
Key Takeaways
- You receive a 1099-INT form from your bank only if interest earned reaches $10 or more in a calendar year.
- Interest under $10 does not require reporting, though you may report it voluntarily on your tax return.
- The 1099-INT shows the interest amount and goes to both you and the IRS, so the IRS already knows about it.
- You report the interest amount on your tax return in the income section, usually on Schedule 1 or directly on Form 1040 depending on your filing method.
- High-yield savings accounts and money market accounts generate interest the same way as regular savings accounts — the reporting rules are identical.
How the 1099-INT form works
When your bank sends you a 1099-INT, it is a record showing how much interest you earned that year. The form has boxes for different types of interest income. For a savings account, the interest appears in Box 1, labeled "Interest income." Your bank keeps a copy for its records, sends one to you, and sends one to the IRS.
You will receive the 1099-INT by January 31 of the year after you earned the interest. For example, interest you earn during 2024 appears on a 1099-INT you receive in January 2025. The form shows your name, address, and tax ID number (usually your Social Security number), plus the bank's information.
Because the IRS receives a copy of your 1099-INT at the same time you do, they know about the interest income whether you report it or not. Failing to report interest that appears on a 1099-INT is a red flag for audits, so it is important to include it on your return.
Where to report the interest on your tax return
The location depends on which tax form you use. If you file Form 1040 (the main individual income tax form), interest income goes on Schedule 1, Part I, line 8, labeled "Interest." You then transfer the total to Form 1040, line 8. If you use tax software, the program usually asks you to enter the 1099-INT information directly, and it places the amount in the correct spot automatically.
If your interest is under $10 and you did not receive a 1099-INT, you can still report it on Schedule 1 if you want to be thorough. Some people do this to keep their records complete, though it is not required.
The interest you report becomes part of your taxable income for the year. Depending on your total income and filing status, it may push you into a higher tax bracket or affect other parts of your return, such as whether you owe taxes or receive a refund.
Why banks report interest at $10
The $10 threshold is a reporting requirement set by the IRS, not by individual banks. It exists partly to reduce paperwork — the IRS does not want banks sending millions of forms for interest amounts under $10. It also reflects the idea that very small amounts of interest are unlikely to significantly change someone's tax situation.
This threshold has been in place for decades and does not change with inflation. Even if you earn $9.99 in interest, you do not receive a 1099-INT. At $10.00 or more, you do. Banks use this rule consistently across all their customers.
Interest rates and how much you might earn
How much interest you earn depends on two things: the interest rate your bank offers and how much money you keep in the account. A regular savings account at a traditional bank might offer 0.01% annual interest, while a high-yield savings account might offer 4% or 5% (rates vary and change frequently). The higher the rate and the larger your balance, the more interest you earn.
To reach the $10 threshold, you need different amounts depending on the rate. At 0.01% interest, you would need $100,000 in the account for a year to earn $10. At 5% interest, you would need only $200 in the account for a year. Most people with modest savings in regular accounts earn less than $10 annually, so they never receive a 1099-INT.
If you move money in and out of your account during the year, the bank calculates interest based on your daily balance. The more money you keep in the account and the longer you keep it there, the more interest accrues.
What happens if you do not report interest income
If you receive a 1099-INT and do not report the interest on your tax return, the IRS will likely notice. Their computers match 1099 forms they receive from banks against the tax returns people file. A missing amount is flagged as a discrepancy.
The IRS may send you a notice asking you to explain the difference or may straightforward assess the tax you owe on that interest plus penalties and interest charges. The penalty for not reporting income is usually 20% of the unpaid tax, plus interest that compounds daily. It is much simpler to report the interest when you file.
If you genuinely did not receive a 1099-INT but earned interest, you should still report it. Keep your bank statements as proof of the amount. If you received a 1099-INT with an error on it — for example, the wrong amount or your wrong tax ID — contact your bank when ready and ask for a corrected form.
Interest income and other tax situations
Interest income is treated as ordinary income, meaning it is taxed at your regular income tax rate. It does not get special treatment like long-term capital gains or may have access to dividends do. If you are in the 22% tax bracket, interest income is taxed at 22%.
If you have very little other income, interest might be your only income for the year. You still have to file a tax return if your total income exceeds the filing threshold for your age and filing status, even if it is mostly interest.
Some people with multiple accounts or investments receive several 1099 forms. You report all of them on the same tax return. Tax software and tax preparers are used to handling multiple income sources, so do not worry about complexity — just gather all your forms and provide them to whoever prepares your return.
Frequently Asked Questions
Do I have to report interest if I earned less than $10?
No, you do not have to report interest under $10, and you will not receive a 1099-INT. However, you may report it voluntarily if you want your records to be complete. The IRS does not track interest amounts below the reporting threshold.
What if my bank made a mistake on the 1099-INT?
Contact your bank as soon as you notice the error. They will issue a corrected 1099-INT, usually marked as a correction. You report the corrected amount on your tax return. Keep both the original and corrected forms with your records.
Do I report interest from a joint savings account?
Yes, but how depends on the account structure. If the account is in both names and you each own half, you each report half the interest. If one person owns the account and the other is just an authorized user, the owner reports all of it. Your bank can tell you how the account is registered if you are unsure.
Does a savings account interest affect my refund or what I owe?
Yes, interest income is added to your total income for the year. If you were expecting a refund, the interest might reduce it slightly. If you owe taxes, the interest might increase what you owe. The exact effect depends on your total income and tax situation.
What if I moved money between banks during the year?
Each bank tracks and reports only the interest earned on money held at that bank. If you had $5,000 at Bank A for six months and $5,000 at Bank B for six months, Bank A reports interest on their $5,000 and Bank B reports interest on theirs. You report both 1099-INT forms on your tax return.