Yes, you report the interest your account earns, not the account itself

The account itself does not need a separate report to the IRS. But the interest income it generates does. If your high yield savings account earned $10 or more in interest during the year, your bank will send you a form called a 1099-INT in January, and you must include that interest on your tax return.

The IRS taxes interest income the same way it taxes wages — as ordinary income. This means the interest is added to your other income and taxed at your regular rate. Even if you earned less than $10, you still owe tax on the interest; the $10 threshold is just when the bank is required to send you the form.

The reason banks report this is straightforward: the IRS receives a copy of every 1099-INT issued, so they already know how much interest you earned. Reporting it on your return makes sure your numbers match theirs.

Key Takeaways

  • You report interest income on your tax return, not the account balance or the account itself.
  • Banks send a 1099-INT form when interest reaches $10 or more in a calendar year.
  • Interest from a high yield savings account is taxed as ordinary income at your regular tax rate.
  • The IRS receives a copy of your 1099-INT, so reporting it prevents mismatches with their records.
  • You owe tax on interest even if you did not receive a 1099-INT form.

When your bank sends you the 1099-INT form

Your bank mails or makes available the 1099-INT by January 31 each year. It shows the total interest paid to you during the previous calendar year. You will receive one form per account if you have multiple accounts at the same bank, or separate forms from different banks if you have accounts in more than one place.

The form goes to you and to the IRS at the same time. If you do not receive it by early February, contact your bank — they have your address on file and may have sent it to an old one. You can also log into your online banking and read it yourself; most banks post 1099-INT forms in the account portal by late January.

How to report the interest on your tax return

When you file your federal income tax return, you report the interest on Schedule B (if you use the long form) or directly on the 1040 form (if you use the short form). The exact line depends on which form you use and whether you are filing on paper or electronically.

If you use tax software like TurboTax, H&R Block, or the IRS's free VITA program, the software will ask you for the interest amount and put it in the right place automatically. You straightforward enter the number from your 1099-INT, and the software handles the rest. If you file on paper, the instructions that come with the 1040 tell you which line to use.

The interest is added to your other income — wages, self-employment income, investment gains, and so on — and taxed at your marginal rate (the rate that applies to your highest dollar of income).

What happens if you have multiple accounts or banks

If you have high yield savings accounts at more than one bank, each bank sends its own 1099-INT. You add up all the interest from all the forms and report the total on your tax return. You do not file separate returns or report each account individually — just the combined interest total.

Keep all your 1099-INT forms together with your tax records. You do not send them to the IRS with your return, but you should keep them for at least three years in case the IRS asks questions later.

Interest earned but not yet reported

Interest accrues (builds up) in your account every day, but you do not owe tax on it until the year it is actually paid to you. If you opened a high yield savings account in December and earned $2 in interest before the year ended, that $2 counts as 2024 income (if you opened it in December 2024) and appears on your 2024 1099-INT.

If you close the account mid-year, the bank still reports all interest earned through the closing date on the 1099-INT for that year. There is no separate form for closed accounts — the interest just appears on the form for the year it was earned.

State and local taxes on interest income

Most states tax interest income the same way the federal government does. If you live in a state with an income tax, you will also report the interest on your state return. A few states — including Florida, Texas, and Wyoming — do not have income tax, so you would not owe state tax on the interest, though you still owe federal tax.

Some cities also tax income. If you live in New York City or another municipality with a local income tax, you report the interest there too. Your tax software or tax preparer will know whether your state or city requires this.

Frequently Asked Questions

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

Yes. The $10 threshold is only when the bank must send you a 1099-INT form. You still owe tax on any interest you earned, even $1. You will need to find the interest amount in your account statements or by contacting the bank.

What if my bank did not send me a 1099-INT but I know I earned interest?

Contact the bank and ask them to send it or confirm the amount. If they confirm you earned interest but did not issue a form (which should not happen if you earned $10 or more), report the interest anyway on your return based on your account statements. Keep records of your request to the bank in case the IRS asks later.

Can I deduct the taxes I pay on interest income?

No. Interest income is taxed as ordinary income, and you cannot deduct the tax itself. However, if you paid state or local taxes on the interest, you may be able to deduct those taxes on your federal return as part of your state and local tax deduction, up to a limit of $10,000 per year.

Does reporting interest income affect my may be able to access for any benefits?

Interest income counts as income on some benefit programs, including certain need-based aid. If you receive Medicaid, SNAP, housing information, or student aid, report the interest to the program administrator if they ask about your income. The amount is usually small, but it is better to disclose it than to have it discovered later.

What if I have a joint account with someone else?

The bank reports the full interest amount on a 1099-INT to whichever person's Social Security number is listed first on the account. That person reports the full amount on their tax return. If you and the other account holder split the interest for tax purposes, you will need to file an amended return or work with a tax preparer to report only your share.