Yes, you must report checking account interest on your federal tax return
Any interest your bank pays you on a checking account is taxable income. The IRS requires you to report it on your tax return, even if the amount is small. Your bank will send you a Form 1099-INT if the interest reaches a certain threshold — usually $10 or more in a calendar year — but you are required to report all interest income regardless of whether you receive the form.
The interest appears on your Form 1040 (the main individual tax return) under "Interest" in the income section. If you file electronically, your tax software will prompt you to enter this amount. If you file by paper, you write it directly on the form.
Some states also tax interest income, though a few do not. Whether your state requires you to report it depends on where you live and your state's tax rules. If you live in a state with an income tax, assume you must report it there as well unless your state specifically exempts interest income.
Key Takeaways
- All checking account interest is taxable income and must be reported to the IRS on your Form 1040, even amounts under $10.
- Your bank sends you a Form 1099-INT only if interest reaches $10 or more, but you report all interest whether or not you receive the form.
- The interest goes in the "Interest" line of your income section on Form 1040 or your tax software's equivalent field.
- Most states with income tax also require you to report interest income on your state return.
- If your bank does not send you a 1099-INT, you still need to report the interest — check your account statements for the exact amount.
When your bank sends you a Form 1099-INT
Your bank is required to send you a Form 1099-INT by January 31 of the year following the tax year in which you earned the interest. For example, interest you earned during 2024 will arrive by January 31, 2025. The form shows the total interest paid to you during that calendar year.
The $10 threshold is a reporting requirement for the bank, not a threshold for you. If you earned $5 in interest, your bank does not have to send you a 1099-INT, but you still owe tax on that $5. You will need to find the amount on your account statements or by logging into your online banking portal and looking at the interest credited to your account.
The IRS receives a copy of every 1099-INT your bank files, so if you do not report interest that appears on a form sent to the IRS, the IRS will likely notice the discrepancy. Even small amounts matter because the IRS matches forms filed by banks against what taxpayers report.
How to find your interest if you did not receive a 1099-INT
Log into your online banking account and review your checking account statements for the year. Banks typically show interest deposits as a separate line item, often labeled "Interest Paid" or "Interest Credit." Add up all the interest deposits from January 1 through December 31 of the tax year you are filing for.
If you no longer have access to your old statements online, call your bank's customer service line and ask them to provide your total interest earned for the calendar year. They can usually tell you over the phone or send you a summary by mail or email. Some banks will also resend a 1099-INT if you request one, even if the amount was below the $10 threshold.
Keep a record of where you found this number — your statement printout or the bank's written confirmation — in case the IRS ever asks how you calculated the amount.
Reporting interest on your tax return
If you use tax preparation software, the program will ask you to enter your interest income in the income section. You will typically see a field labeled "Interest Income" or "Taxable Interest." Enter the total amount from your 1099-INT or your account statements.
If you file Form 1040 by hand, write the total interest amount on the line labeled "Interest" in Part 1 (Income). The exact line number changes slightly from year to year, but it is always in the income section near the top of the form.
If you have interest from multiple sources — a checking account, savings account, money market account, or CDs — add them all together and report the total on that single line. You do not need to break them out separately unless the total interest exceeds $1,500, in which case you may need to file a Schedule B (Interest and Ordinary Dividends). Your tax software will handle this automatically.
State tax reporting requirements
Most states that have an income tax also tax interest income. You report it on your state return the same way you report it to the IRS — as income in the appropriate section. A few states, such as Tennessee and New Hampshire, do not tax interest income, but they are exceptions.
If you live in a state with an income tax and earned interest, check your state's tax form or your tax software's state section to see where interest income goes. The process is usually straightforward and mirrors the federal return.
If you moved during the year or lived in multiple states, you may owe tax to more than one state. Your tax software can usually handle this, but if you file by hand, contact your state's revenue department to learn the rules for part-year residents.
Interest income and your overall tax situation
The amount of tax you owe on interest depends on your overall income and tax bracket. Interest is taxed as ordinary income, meaning it is added to your wages, self-employment income, and other sources and taxed at your marginal rate. Someone in the 22% tax bracket pays roughly 22 cents in federal tax for every dollar of interest earned.
Interest income can also affect whether you are required to file a return at all. If your only income is interest and it falls below the standard deduction for your filing status, you may not have to file. However, if you have other income or are claimed as a dependent, the rules change. Use the IRS's interactive tool on their website to determine whether you must file.
If you earned a very small amount of interest — say, $2 or $3 — it will have minimal impact on your tax bill. But you still report it. The IRS does not have a de minimis exception for interest income.
What to do if your 1099-INT shows the wrong amount
If the interest amount on your 1099-INT does not match what you see in your account statements, contact your bank first. Ask them to verify the calculation. Banks occasionally make errors, and if they do, they will issue a corrected form called a Form 1099-INT (Corrected).
If the bank confirms the amount is correct but it still does not match your records, reconcile your account statements line by line. Interest may have been credited on a date you did not expect, or you may have missed a deposit. Once you and the bank agree on the correct amount, report that amount on your tax return.
If you file your return and later discover the 1099-INT was wrong, you can file an amended return using Form 1040-X. You have three years from the original due date to make the correction.
Frequently Asked Questions
Do I have to report interest if I earned less than $10?
Yes. The $10 threshold only determines whether your bank must send you a 1099-INT. You are required to report all interest income to the IRS, regardless of the amount. Check your account statements for the exact figure and report it on your return.
What if I have multiple checking accounts at different banks?
Add up the interest from all your accounts and report the total on a single line on your tax return. Each bank will send you a separate 1099-INT if their interest reaches $10, but you combine them all when you file.
Does interest from a joint checking account get split between both owners?
The bank reports the full interest amount to both account owners on separate 1099-INT forms. You and the other owner must decide how to split it based on your ownership agreement. If you each own 50%, you each report 50% of the interest. Keep documentation of how you divided it in case the IRS asks.
Can I deduct anything against my interest income?
No. Interest income is reported in full with no deductions. You cannot reduce it by investment expenses or other costs. However, if you have investment losses, you may be able to use them to offset other income, but that is a separate calculation.
What if I did not file a return and earned interest — do I need to file now?
If your only income was interest below the standard deduction, you were not required to file. However, if you had other income or are claimed as a dependent, you should have filed. If you are unsure, contact the IRS or a tax professional. If you owe tax, filing late may result in penalties and interest, but filing is still better than not filing.