Yes, you must report all interest income, no matter how small

The IRS requires you to report interest earned on savings accounts, money market accounts, and certificates of deposit on your federal tax return. This is true even if the bank did not send you a Form 1099-INT, even if the interest is less than $10, and even if you did not withdraw the money. Interest is taxable income the moment it posts to your account.

The bank will send you a Form 1099-INT if the interest you earned reaches $10 or more during the tax year. If you earned less than $10, the bank does not have to send the form, but you still owe tax on that interest. You report it on your tax return using the information from your bank statements.

The only exception is interest earned in a Roth IRA or traditional IRA. Interest inside these retirement accounts is not reported on your tax return in the year it is earned. The same rule applies to interest in a 529 college savings plan — it grows tax-deferred and is not reported annually.

Key Takeaways

  • All interest from regular savings accounts, money market accounts, and CDs must be reported on your federal tax return, even if it is under $10.
  • Banks send Form 1099-INT only when interest reaches $10 or more, but you report smaller amounts using your bank statement.
  • Interest earned inside IRAs and 529 plans is not reported on your annual tax return because those accounts are tax-deferred.
  • You report savings account interest on Schedule 1 (Form 1040) or on your state return if your state taxes interest income.

Where to report interest on your federal return

On your federal tax return, you report interest income on Schedule 1 (Form 1040), line 8a. This is where you list all interest from savings accounts, CDs, money market accounts, and any other taxable interest sources. If you file electronically, your tax software will ask you for this amount and place it in the correct spot.

If you received a Form 1099-INT from your bank, use the amount shown in box 1 of that form. If you did not receive a 1099-INT because your interest was under $10, add up the interest from your bank statements for the year and report that total instead.

Some states also tax interest income. Check your state tax return instructions to see whether you need to report the same interest amount on your state return. A few states do not tax interest at all, so your state return may not have a line for it.

How to find your interest income if you did not get a 1099-INT

Log into your bank's website or mobile app and look for a year-to-date interest summary. Most banks show this in the account details or statements section. You can also download your monthly statements for the entire year and add up the interest posted each month.

If you have multiple savings accounts at the same bank, the 1099-INT will combine all of them. If you have accounts at different banks, each bank sends its own 1099-INT. You must add up interest from all sources when you report on your tax return.

Keep a record of where you found this number — your bank statement, your online account summary, or a letter from the bank. If the IRS ever questions your return, you will need to show proof of the amount you reported.

What happens if you do not report interest income

The IRS receives a copy of every Form 1099-INT that banks send to you. If you report a different amount than what appears on your 1099-INT, or if you do not report interest at all, the IRS computer system flags the discrepancy. You may receive a notice asking you to explain the difference or pay additional tax plus interest and penalties.

Even small amounts matter. If you earned $8 in interest and did not report it, and the IRS catches it, you owe tax on that $8 plus penalties. The penalty for not reporting income is usually 20 percent of the unpaid tax, plus interest that compounds daily.

The safest approach is to report all interest, even amounts under $10. The tax on small interest amounts is usually just a few cents, and reporting it takes seconds on your tax return.

Interest in retirement accounts and education savings plans

Interest earned inside a traditional IRA or Roth IRA does not get reported on your annual tax return. The account itself is tax-deferred, meaning interest compounds without triggering a tax bill each year. When you withdraw money from a traditional IRA in retirement, that is when you pay tax on the earnings. Roth IRA withdrawals are tax-free if you follow the rules.

The same tax-deferred treatment applies to 529 college savings plans. Interest and investment gains inside a 529 grow without annual reporting. You only report and pay tax on the earnings when you withdraw money for non-education expenses.

If you have both regular savings accounts and retirement accounts, report only the interest from the regular accounts on your tax return. Do not include interest from IRAs or 529 plans.

Joint accounts and interest reporting

If you own a savings account jointly with another person, the bank reports the full interest amount on a single 1099-INT. The form goes to whichever owner's Social Security number is listed first on the account. That person receives the 1099-INT but should not report all the interest if both owners contributed to the account.

You and the other owner need to decide how to split the interest based on each person's ownership stake. If you each own 50 percent of the account, you each report 50 percent of the interest on your own tax return. Keep a record of how you split it in case the IRS asks.

If only one owner actually contributed the money, that person reports all the interest. The other owner reports nothing. The key is that whoever reports the interest must have actually earned it through their own funds.

High-yield savings accounts and money market accounts

High-yield savings accounts and money market accounts work the same way as regular savings accounts for tax purposes. All interest is taxable and must be reported on your federal return. The higher interest rate does not change the reporting requirement — it just means you owe tax on a larger amount.

If you earned $500 in interest from a high-yield account, you report all $500 on Schedule 1. The bank sends you a 1099-INT for that amount. Your tax software or tax preparer will calculate the tax you owe based on your overall income and tax bracket.

Some people move money to high-yield accounts specifically to earn more interest, but they forget that the extra earnings are also taxable. Budget for the tax bill when you plan how much to keep in these accounts.

Frequently Asked Questions

Do I have to report interest if I earned less than $10?

Yes. The bank only sends a 1099-INT if interest reaches $10 or more, but you must report all interest on your tax return, even $1. Use your bank statement to find the amount and report it on Schedule 1.

What if my bank sent me a 1099-INT but I think the amount is wrong?

Contact your bank and ask them to verify the calculation. If they made an error, they will send you a corrected 1099-INT (marked as a correction). Report the corrected amount on your tax return. Keep the corrected form with your tax records.

Do I report interest from a savings account held in my child's name?

Yes, your child must report it on their own tax return, even if you opened the account and manage it. If your child's interest and other unearned income exceeds a certain threshold (which changes yearly), they may owe tax or you may need to report it on your return under "kiddie tax" rules. Check IRS Publication 929 for the current limits.

Is interest from a CD taxable in the year I buy it or when it matures?

You report interest in the year it is earned, not when the CD matures. If you buy a one-year CD in December and it earns $50 in interest by the end of that year, you report the $50 on your tax return for that year, even though you do not withdraw the money until the next year.

What if I moved money between banks mid-year and got two 1099-INTs?

Add up the interest from both forms and report the total on Schedule 1. The IRS knows you may have multiple accounts, so reporting combined interest is normal. Make sure the total matches what you report on your return.