Where the IRS expects to see your interest
The IRS expects you to report interest from savings accounts on your federal tax return, and your bank will send you a form that lists exactly how much you earned. That form is called a 1099-INT, and it arrives by January 31 each year for any account that paid you $10 or more in interest during the previous year.
You report this interest on Form 1040 (the main individual tax return form) or on Schedule 1 if you file electronically. The interest goes into a category called "interest income," and it counts as taxable income whether you spent the money, left it in the account, or moved it somewhere else.
If you had multiple savings accounts at different banks, you will receive a separate 1099-INT from each one. You add all of them together when you report to the IRS.
Key Takeaways
- Your bank sends you a 1099-INT by January 31 for any savings account that paid $10 or more in interest during the year.
- You report the total interest on Form 1040 or Schedule 1 as part of your taxable income, even if you did not withdraw the money.
- If you earned less than $10 in interest at a single bank, that bank does not send a 1099-INT, but you still owe tax on it if your total income requires you to file.
- The interest is taxed at your ordinary income tax rate, not a special rate, so it adds to your total income for the year.
What to do when you receive your 1099-INT
When your 1099-INT arrives, check it for accuracy before you file. The form shows your name, Social Security number, the account number, and the total interest paid. If any of this information is wrong—especially your Social Security number or the dollar amount—contact your bank when ready and ask for a corrected form.
Keep a copy of the 1099-INT with your tax records. You do not send it to the IRS with your return, but you need it to fill in the interest income line on your tax form. The IRS receives a copy directly from your bank, so the numbers must match what you report.
If you file your taxes electronically through tax software or a tax preparer, you can usually enter the 1099-INT information directly into the program, and it will place the interest in the correct spot on your return automatically.
Interest you earned but did not receive a 1099-INT for
Banks are only required to send a 1099-INT if you earned $10 or more in interest at that institution during the year. If you had a savings account that paid less than $10, your bank will not send a form, but you still owe tax on that interest.
You report this interest the same way: on Form 1040 or Schedule 1 as interest income. Keep your own records of the account and the interest paid—you can usually find this on your monthly statements or by logging into your online banking portal and checking the year-to-date interest total.
This matters most if you have multiple small savings accounts or if interest rates were very low during the year. Add up all the interest from all your accounts, whether or not you received a 1099-INT for each one.
How interest income affects your tax bill
Interest from savings accounts is taxed as ordinary income, which means it is added to your wages, self-employment income, or other earnings and taxed at your normal tax rate. If you are in the 22% tax bracket, the interest is taxed at 22%. If you are in the 12% bracket, it is taxed at 12%.
This is different from long-term capital gains or may have access to dividends, which have their own lower tax rates. Interest does not get that treatment, so it can push you into a higher tax bracket if you have a large amount of it.
For example, if you earned $50,000 in wages and $5,000 in interest, the IRS treats your total income as $55,000 for tax purposes. The interest is not taxed separately—it straightforward adds to your income total.
Special situations: Joint accounts and custodial accounts
If you own a savings account jointly with another person, the bank will send the 1099-INT to whoever is listed first on the account, or it may split the interest between both owners. Check with your bank about how they report joint account interest, because you and the other owner may need to divide the reported amount based on your actual ownership share.
If you are the custodian of a savings account for a minor child, the interest is usually reported on the child's tax return, not yours, even though you control the account. The bank will send the 1099-INT in the child's name and Social Security number. This matters because the child may have a lower tax bracket or may not owe tax at all if their total income is below the filing threshold.
Custodial accounts have special rules about how much interest a child can earn before they owe tax, and those rules change each year. If you manage a custodial account, check the current year's IRS guidance or speak with a tax preparer about whether the child needs to file.
If you did not receive a 1099-INT you expected
If you know you earned interest but did not receive a 1099-INT by early February, contact your bank. The form may have been mailed to an old address, or the bank may have made an error in determining whether to send one.
Ask the bank to either send you a replacement 1099-INT or provide you with a written statement showing the interest paid. You need this documentation to report the interest accurately on your return and to prove the amount if the IRS ever questions it.
Do not wait until the last minute to track this down. If you file your return without reporting interest you actually earned, and the IRS later receives a 1099-INT from your bank showing that interest, you may owe additional tax plus penalties and interest charges.
Reporting interest on your actual tax return
The exact line where you report interest depends on which form you file. On Form 1040, interest income goes on Line 1b under "Income." If you file electronically, your tax software will ask you to enter the total interest from all your 1099-INT forms and any other interest you earned, and it will place the number in the correct spot automatically.
If you are filing a paper return, write the total interest amount on Line 1b and attach a statement listing each 1099-INT if you received more than one. This helps the IRS match the forms they received from your banks to what you reported.
Some tax software also asks whether you want to itemize deductions or take the standard deduction. Interest income does not change which deduction method you choose, but it does increase your total income, which can affect whether you owe tax or get a refund.
Frequently Asked Questions
Do I have to report interest if I earned less than $10?
Yes, if your total income requires you to file a tax return. The $10 threshold only determines whether your bank sends a 1099-INT form—it does not determine whether you owe tax on the interest. You report all interest you earned, even amounts under $10.
What if the 1099-INT shows the wrong amount?
Contact your bank when ready and ask for a corrected form, called an amended 1099-INT. The bank will send a corrected version to you and to the IRS. Do not file your tax return until you have the correct form, because the IRS will see the original 1099-INT and will expect your return to match it.
Can I deduct the taxes I paid on interest income?
No. Interest income is reported as gross income, and you cannot deduct the tax you owe on it. However, if you paid estimated taxes during the year or had taxes withheld from other income, those payments reduce what you owe overall.
Does interest from a money market account get reported the same way?
Yes. Money market accounts, savings accounts, and certificates of deposit (CDs) all generate interest that is reported on a 1099-INT and taxed as ordinary income. The reporting process is identical.
What if I moved money between accounts during the year?
Moving money does not change how you report interest. You report the interest earned in each account, regardless of when you transferred the balance. Each bank reports only the interest their account generated, not the transfers.