You must report savings account interest if you earned $10 or more in a year, but the IRS threshold and your filing requirement depend on your age and income

The short answer: if your savings account earned $10 or more in interest during the tax year, your bank will send you a Form 1099-INT, and you must report that interest on your federal tax return. You file it on Schedule 1 (Form 1040), line 8b. The IRS knows about the interest because your bank reports it too — they send the same form to the IRS — so not reporting it creates a mismatch that can trigger an audit notice.

However, whether you have to file a tax return at all is a separate question. You might have to report the interest even if you don't file a return, or you might not have to file a return at all depending on your total income, age, and filing status. The interest itself doesn't automatically require you to file — your overall income does.

Key Takeaways

  • Banks report savings interest of $10 or more on Form 1099-INT, which the IRS receives, so unreported interest creates a record mismatch.
  • You must report the interest on your tax return if you file one, but filing a return depends on your total income and filing status, not the interest alone.
  • The IRS filing threshold varies by age: for 2023, a single person under 65 needs $13,850 in income to file; over 65 it's $17,550.
  • If you don't meet the filing threshold, you can still file to claim a refund of taxes withheld or to claim the Earned Income Tax Credit.
  • High-yield savings accounts and money market accounts report interest the same way as traditional savings accounts.

How banks report your savings interest

Your bank generates a Form 1099-INT for each account that earned $10 or more in interest during the calendar year. The bank mails you a copy by January 31 and sends an identical copy to the IRS. The form shows your name, Social Security number, the account number, and the exact dollar amount of interest earned.

This happens automatically — you don't request it or opt in. Even if you never touch the account, if it earned interest, the form goes out. The IRS matches the 1099-INT they receive from the bank against the income you report on your tax return. If you don't report it, the IRS computer flags the discrepancy.

Interest under $10 is not reported on a 1099-INT, but you are still technically required to report it if you file a return. In practice, amounts under $10 rarely trigger enforcement, but the rule exists.

When you must file a return despite low income

The IRS sets a filing threshold — the minimum income at which you must file. For the 2023 tax year (filed in 2024), the threshold for a single person under age 65 is $13,850 in gross income. For a single person 65 or older, it's $17,550. If you're married filing jointly and both under 65, it's $27,700. These thresholds change each year.

Savings interest counts toward this threshold. If you earned $8,000 in wages and $3,000 in savings interest, your total gross income is $11,000 — below the $13,850 threshold for a single person under 65, so you would not be required to file. But if you earned $11,000 in wages and $3,000 in interest, your total is $14,000 — above the threshold — and you must file.

The threshold is based on your filing status and age as of December 31 of the tax year. If you turned 65 on December 31, you use the higher threshold for that year.

What happens if you don't file when you should

If the IRS receives a 1099-INT showing interest income that you don't report on a return, they will send you a notice — usually an automated letter asking you to explain the discrepancy or file an amended return. The notice itself is not a penalty; it's a request for clarification.

If you ignore the notice, the IRS can assess tax on the unreported interest plus penalties and interest charges. The penalty for failing to file is typically 5% of the unpaid tax per month, up to 25%. Penalties for failing to pay are separate. Interest accrues daily on any unpaid tax.

The good news: if you owed no tax on that interest (because your other income was low enough), responding to the notice with a brief explanation and your tax return usually resolves it without penalty. The IRS is looking for intentional evasion, not honest mistakes by people with low income.

Filing to claim a refund even if you don't have to

You can file a tax return even if your income is below the filing threshold. Many people do this to claim a refund of taxes that were withheld from paychecks or to claim the Earned Income Tax Credit (EITC), which can result in a refund larger than the taxes you paid.

Savings interest is not subject to withholding — the bank doesn't hold back taxes — so interest income alone won't generate a refund. But if you had other income with withholding, filing can get that money back. For example, if you earned $8,000 in wages with $1,200 withheld and $2,000 in savings interest, you don't have to file (total income is $10,000, below the threshold), but filing would return the $1,200 to you.

High-yield savings accounts and money market accounts

High-yield savings accounts and money market accounts report interest the same way as traditional savings accounts. If the account earned $10 or more, you receive a 1099-INT. The interest rate is higher, so you're more likely to cross the $10 threshold, but the reporting requirement is identical.

Some banks offer promotional interest bonuses — a one-time payment for opening an account or meeting a deposit target. These bonuses are reported as interest on the 1099-INT and must be reported on your tax return the same way.

Reporting the interest on your tax return

When you file, you report the interest on Schedule 1 (Form 1040), line 8b, labeled "Interest." You enter the total amount from all your 1099-INT forms combined. You don't need to attach the 1099-INT forms to your return, but keep them for your records in case the IRS asks.

If you file electronically, the software will prompt you to enter the interest income. If you file by paper, write the amount on the line. The IRS will match your reported amount to the 1099-INT they received from your bank, so the numbers must match or be very close (small discrepancies due to rounding are usually ignored).

Interest income is taxed as ordinary income at your regular tax rate. It does not get special treatment like long-term capital gains. A person in the 22% tax bracket who earned $1,000 in savings interest would owe roughly $220 in federal tax on that interest, though the exact amount depends on other income and deductions.

Frequently Asked Questions

Do I have to report interest if I didn't receive a 1099-INT?

If your account earned less than $10, the bank won't send a 1099-INT, but you still must report the interest if you file a return. However, amounts under $10 are rarely enforced. If your account earned $10 or more and you didn't receive a form by February 15, contact your bank — they may have sent it to an old address.

What if I have multiple savings accounts at different banks?

Each bank sends a separate 1099-INT for each account. When you file, add up all the interest from all the forms and report the total on line 8b of Schedule 1. The IRS will receive all the individual 1099-INTs and will match them to your reported total.

Can I deduct savings account fees from the interest I report?

No. You report the gross interest the bank paid you, not the net after fees. Savings account fees are not deductible on your personal tax return. You report the interest as shown on the 1099-INT without adjustment.

Do I have to file if I'm a dependent and my only income is savings interest?

Dependents have a lower filing threshold. For 2023, a dependent with only unearned income (like interest) must file if their income exceeded $1,150. The threshold is higher if they also have wages. Check the IRS Pub. 17 for the exact threshold for your situation.

What if the 1099-INT shows the wrong amount of interest?

Contact your bank immediately. They can issue a corrected 1099-INT (marked as a correction) and send it to you and the IRS. File your tax return using the corrected amount. If you already filed, you can file an amended return (Form 1040-X) once you receive the corrected form.