When the IRS requires you to report savings account income
You do not report the account itself on your tax return — the IRS does not care how much money sits in your savings account. You do report the interest your bank pays you on that money. If your savings account earned any interest during the year, that interest counts as taxable income and belongs on your federal tax return.
The threshold is low. If you earned $10 in interest, you report $10. There is no minimum amount of interest that makes it "worth" reporting. Your bank will send you a Form 1099-INT if the interest reached $10 or more during the year, but even if they do not send the form, you still owe tax on the interest you earned.
The interest rate on most savings accounts is small — often less than 1 percent annually — so the actual tax you owe on that interest is usually small too. But the reporting requirement exists regardless of the amount.
Key Takeaways
- You report interest earned on your savings account as income on your tax return, not the account balance itself.
- Your bank sends Form 1099-INT when interest reaches $10 or more, but you must report all interest income even if you do not receive the form.
- Interest income goes on Schedule 1 (Form 1040) or Schedule B if you have other investment income to report.
- High-yield savings accounts and money market accounts produce more interest than traditional savings accounts, so the reporting requirement matters more with those products.
How banks report your interest to the IRS
Your bank tracks the interest it pays you throughout the year and reports it to both you and the IRS on Form 1099-INT. You receive a copy by January 31 of the following year. The form shows the total interest paid in box 1.
If you have multiple savings accounts at different banks, you will receive a separate 1099-INT from each bank. Add up all the interest from all your forms when you file your return. If you earned interest at one bank but not another, only the bank that paid interest sends you a form.
The IRS receives the same 1099-INT your bank sends to you. This is how they know to expect that interest income on your return. If you do not report it, the IRS will notice the mismatch between what the bank reported and what you filed.
Where to report savings account interest on your return
If your total interest income for the year is $1,500 or less, you report it on line 2b of Form 1040 (the main federal tax form). You do not need to file Schedule B. Write the total interest from all your 1099-INT forms on that single line.
If your total interest income exceeds $1,500, or if you also have dividend income or other investment income to report, you must file Schedule B (Interest and Ordinary Dividends) and attach it to your Form 1040. Schedule B asks you to list each source of interest separately, then totals them for you to transfer to Form 1040.
You can file your taxes yourself using tax software, which will walk you through entering this information in the right place. If you use a tax preparer, bring your 1099-INT forms with you so they have the correct figures.
Savings accounts that generate more interest — and more reporting
Traditional savings accounts at large banks often pay very little interest, sometimes less than 0.01 percent annually. A $10,000 balance might earn $1 per year. High-yield savings accounts, by contrast, currently pay between 4 and 5 percent annually, so the same $10,000 would earn $400 to $500 per year.
Money market accounts and certificates of deposit (CDs) also pay higher interest rates than traditional savings accounts. If you moved money to one of these products in recent years, your interest income is likely higher than it was before, which means your tax reporting matters more.
The reporting requirement is the same regardless of the account type — you still report all interest on your tax return. But the dollar amount you report will be noticeably larger with a high-yield account, which may affect your overall tax bill.
What happens if you do not report savings account interest
The IRS matches 1099-INT forms from banks against the tax returns people file. If a bank reported interest income under your Social Security number and you did not report it on your return, the IRS will send you a notice asking why. This is called a CP2000 notice.
You have the right to respond to the notice and explain if you believe the bank's report was wrong. But in most cases, the interest was correctly reported by the bank, and you will owe the tax plus interest on the unpaid amount. The IRS may also assess a penalty for underreporting income, though the penalty is often waived if the error was unintentional and you correct it promptly.
Reporting the interest when you file avoids this process entirely. The amount is usually small enough that it does not change your tax bill significantly, but it keeps your return in sync with what the IRS already knows about your income.
Joint accounts and who reports the interest
If you own a savings account jointly with another person, the bank reports the total interest to both account holders. Only one of you should report the full amount on your tax return — typically the person whose Social Security number is listed first on the account.
If you and your spouse file jointly, you report all interest income on your combined return regardless of whose name is on the account. If you file separately or the account is held with someone other than your spouse, you need to decide who will claim the interest. The person who claims it should keep records showing the split if the interest is divided between you.
Talk to the other account holder before you file to make sure you are not both reporting the same interest, which would trigger an IRS notice.
Interest from savings accounts held for minors
If you opened a savings account for a child and the interest is paid in the child's name, the child must report that interest on their own tax return — not on yours. A minor's tax filing requirements depend on their total income for the year, which includes interest.
If the child's only income is interest from a savings account and that interest is under a certain threshold (which varies by year), they may not be required to file. But if they have other income or if the interest is high enough, they will need to file their own return or be claimed as a dependent on yours.
Custodial accounts and UTMA accounts (Uniform Transfers to Minors Act) have special tax rules. The interest may be taxed at the child's rate or at your rate depending on the child's age and the account structure. A tax preparer can help you sort out the correct treatment for a minor's savings account.
Frequently Asked Questions
Do I have to report savings account interest if I earned less than $10?
Yes. The $10 threshold is only when your bank is required to send you a Form 1099-INT. You must report all interest income on your tax return, even if it is $1 or $5. The IRS does not have a minimum reporting threshold for individuals.
What if my bank did not send me a 1099-INT but I know I earned interest?
Report the interest anyway. Your bank may have made an error, or the interest may have fallen just below their reporting threshold. You can contact the bank and ask for a corrected form, or you can report the interest based on your own account statements. Keep your bank statements as documentation.
Does a savings account balance count as income for government programs?
Savings account balances may affect your standing for means-tested programs like Medicaid, SNAP, or housing assistance, but that is separate from tax reporting. Those programs look at your assets, not your income. Check the specific program rules to see if savings accounts are counted toward asset limits.
Can I deduct fees my bank charged against the interest I earned?
No. You report the full interest amount the bank paid you. Bank fees are not deductible on your personal tax return. You report interest as a positive number and fees as a loss only if they exceed your interest income, which is rare.
What if I moved money between savings accounts during the year?
Moving money between your own accounts does not create taxable income. Only the interest the banks paid you is taxable. If you moved $50,000 from one savings account to another, that transfer itself is not reported on your taxes — only the interest earned on whichever account held the money is reported.