Yes, you must report all savings account interest on your tax return, even small amounts

The IRS requires you to report every dollar of interest your savings account earns. There is no minimum threshold — if your account earned $1 in interest, that $1 goes on your return. The bank will send you a Form 1099-INT in January showing what you earned the previous year, and you report that figure on your tax return.

The reason is straightforward: interest is income. The IRS treats it the same way it treats wages or freelance earnings. Your bank is required to report what it paid you, and the IRS receives a copy of that report. If your return does not match what the bank reported, the IRS will notice.

This applies to all types of savings accounts — regular savings, money market accounts, certificates of deposit (CDs), and high-yield savings accounts. It also applies to interest from bonds, Treasury bills, and other investments that generate interest income.

Key Takeaways

  • You must report all savings account interest on your tax return, regardless of the amount.
  • Your bank sends you Form 1099-INT by January 31 showing the interest you earned in the previous year.
  • You report this interest on Schedule B (Form 1040) if you have more than $1,500 in interest income, or directly on Form 1040 if you have less.
  • The IRS receives a copy of your 1099-INT from the bank, so unreported interest will likely be flagged during processing.

How the bank reports your interest to the IRS

In late January, your bank mails you Form 1099-INT for the previous calendar year. This form shows the total interest paid to your account. If you have multiple accounts at the same bank, the interest may be combined on one form or split across multiple forms depending on the bank's system.

The bank also sends a copy of this form to the IRS. This is why the IRS knows how much interest you earned even before you file your return. If you do not report the interest, the IRS will eventually cross-reference what you reported against what the bank reported.

If you did not receive a 1099-INT but you know you earned interest, contact your bank. They may have sent it to an old address, or in rare cases they may have made an error. You can request a duplicate copy.

Where interest income goes on your tax return

The location depends on how much total interest you earned. If your interest income was $1,500 or less, you report it directly on Form 1040 (the main tax form) in the section for interest and dividend income. You do not need to file Schedule B.

If you earned more than $1,500 in interest across all accounts and investments, you must file Schedule B along with your Form 1040. Schedule B is where you list each source of interest income separately. You then transfer the total from Schedule B to Form 1040.

The threshold of $1,500 applies to your combined interest from all sources — savings accounts, CDs, bonds, Treasury securities, and any other interest-bearing accounts. If you have $800 from one savings account and $900 from a CD, that is $1,700 total, so you file Schedule B.

What happens if you do not report interest income

The IRS will eventually discover unreported interest because the bank's report does not match your return. This mismatch triggers an automated notice. The IRS will send you a letter asking you to explain the difference or pay the tax owed plus interest and penalties.

The penalty for not reporting interest is typically 20 percent of the unpaid tax, plus interest calculated from the original due date. If the IRS determines the omission was intentional rather than an honest mistake, the penalty can be higher. Even if it was a mistake, you still owe the tax and interest.

The IRS has up to three years to assess tax on unreported income in most cases, though that window can extend to six years or longer if the underreporting is substantial. It is far simpler to report the interest when you file.

Interest from joint accounts and accounts held by minors

If you own a savings account jointly with another person, the bank may split the interest between you on separate 1099-INT forms, or it may report all the interest to one person. Check the form carefully — you are only responsible for reporting the interest attributed to you on your copy.

If you have a custodial account for a minor child, the interest is reported on the child's tax return, not yours. The bank will issue a 1099-INT in the child's name and Social Security number. Depending on the amount and the child's other income, the child may need to file their own return, or the interest may be reported on the parent's return under the "kiddie tax" rules. A tax professional can advise on your specific situation.

Interest from accounts that closed during the year

If you closed a savings account during the year, the bank still reports all interest earned up to the closing date on a 1099-INT. You report this interest on your return for that tax year, even though the account no longer exists.

Sometimes a bank will issue a 1099-INT for a closed account in the following year if interest was posted after the account closed. If this happens, you report it on the return for the year the interest was actually earned, not the year you received the form. Keep records of when your account closed so you can match the timing correctly.

Interest from accounts at credit unions and online banks

Credit unions and online banks follow the same reporting rules as traditional banks. They issue Form 1099-INT and send a copy to the IRS. The amount and timing are the same — you receive the form by January 31, and you report the interest on your return.

Some online banks and credit unions allow you to view your 1099-INT online before it arrives in the mail. If your bank offers this, you can read it early and begin preparing your return sooner. The online version is the same as the mailed version.

Frequently Asked Questions

Do I have to report interest if I earned less than $100?

Yes. There is no minimum amount of interest that triggers a reporting requirement. Even $1 in interest must be reported on your tax return. The IRS does not have a de minimis threshold for interest income.

What if my bank made a mistake on the 1099-INT?

Contact your bank when ready and ask them to issue a corrected form (Form 1099-INT with a "Corrected" box checked). Once you receive the corrected form, report the correct amount on your return. If you have already filed, you may need to file an amended return.

Can I deduct any expenses against my interest income?

Generally no. Interest income is reported as-is with no deductions. You cannot deduct fees your bank charged or the cost of maintaining the account against the interest you earned. Those expenses are not tax-deductible for most taxpayers.

What if I earned interest but did not receive a 1099-INT?

Contact your bank and request a copy. Banks are required to issue 1099-INT forms for all interest paid. If the bank cannot locate it, ask for a written statement showing the interest earned. You still report the interest on your return even if you do not have the official form.

Does interest from a savings account count toward my standard deduction?

No. Interest income does not reduce your standard deduction. Your standard deduction is a fixed amount based on your age and filing status. Interest is added to your taxable income separately. Both explore to your return independently.