Yes, you must report interest earned on savings accounts to the IRS, even if the bank doesn't send you a form
The IRS requires you to report all interest income, regardless of the amount. If your bank pays you interest, that money counts as taxable income on your federal tax return. The threshold for when banks must send you a Form 1099-INT is $10 or more in a calendar year, but you owe taxes on interest below that amount too — you just won't receive official documentation from the bank.
Your obligation to report doesn't depend on whether you receive a form, whether the amount is small, or whether the bank reports it to the IRS. If you earned it, you report it. The IRS cross-checks 1099 forms against tax returns, so unreported interest on accounts the bank does report creates a mismatch that triggers review.
Key Takeaways
- Banks send Form 1099-INT only when interest reaches $10 or more in a calendar year, but you must report all interest income regardless of amount.
- Interest under $10 that you don't report won't trigger an automatic IRS notice, but it is still legally required income to claim.
- You report savings account interest on Schedule 1 (Form 1040) under "Interest" — the same line where you'd report interest from bonds, CDs, or money market accounts.
- If you have multiple savings accounts, add up the interest from all of them before deciding whether you meet the $10 threshold for receiving a 1099-INT.
- Joint account holders each report their proportional share of interest, which the bank may split on separate 1099 forms or show on one form with both names.
How the $10 threshold works and what it means for you
The $10 rule is a reporting threshold, not a tax threshold. Banks are required to issue a 1099-INT when interest reaches $10 in a single calendar year (January 1 through December 31). If your savings account earned $8.50 in interest, the bank will not send you a form. You still owe tax on that $8.50.
The IRS knows that many people earn small amounts of interest below the reporting threshold. They expect those amounts to be reported on tax returns. If you don't report it and the IRS later discovers the unreported income, penalties and interest accrue on the unpaid tax, even if the original amount was small.
If you have multiple accounts at the same bank or different banks, add the interest together. If you earned $6 at Bank A and $5 at Bank B, you won't receive a 1099-INT from either bank, but you still report the combined $11 on your tax return.
Where to report interest on your tax return
Interest income goes on Schedule 1 (Form 1040), which is part of the standard federal tax return. You'll find the "Interest" line near the top of the schedule. Write the total interest from all sources — savings accounts, CDs, money market accounts, bonds, and any other interest-bearing accounts.
If you received a 1099-INT from your bank, the form shows the interest amount in Box 1. Copy that number onto Schedule 1. If you earned interest below the $10 threshold and received no form, you still write the amount on Schedule 1 based on your own records — your bank statement or year-end summary from your online account.
Some tax software will ask you to enter interest income directly. Others will ask whether you received a 1099-INT and import the data from there. Either way, the interest ends up reported on Schedule 1, which feeds into your total income calculation.
What happens if you don't report small amounts of interest
Interest under $10 that you don't report is unlikely to trigger an automatic IRS notice, because the IRS doesn't receive a 1099-INT to cross-check against your return. However, that doesn't make it legal to omit. If the IRS audits your return for other reasons and discovers unreported interest, you'll owe back taxes plus penalties and interest charges on the unpaid amount.
The IRS also has access to bank records and can request them during an audit. If they find deposits or account statements showing interest you didn't report, that becomes evidence of underreporting income. The penalty for negligence on unreported income is typically 20% of the underpaid tax, plus interest calculated from the original due date.
The safest approach is to report all interest, even amounts under $10. The effort to report is minimal — a single line on your tax return — and it eliminates the risk entirely.
Interest on joint accounts and how to split it
If you own a savings account jointly with another person, the interest belongs to both of you unless you have a written agreement stating otherwise. The bank typically splits the interest 50/50 and may issue separate 1099-INT forms to each owner, or one form showing both names with the full amount.
Check your 1099-INT carefully. If the bank issued one form for the full amount and both names appear on it, you and the other owner need to coordinate on how to report it. If you each report 50% of the interest, that's correct. If you each report the full amount, you've overstated your income and the IRS will notice the discrepancy when they cross-check both returns.
If the bank issued separate 1099 forms to each owner, each form should show only that owner's share. Report what appears on your form. If you're unsure how the bank split the interest, contact them and ask for clarification before filing your return.
Special situations: IRAs, custodial accounts, and tax-exempt interest
Interest earned inside a traditional IRA or 401(k) is not reported on your tax return in the year it's earned. The account grows tax-deferred, and you report withdrawals later when you take money out. If your savings account is actually an IRA, the interest doesn't go on Schedule 1.
Interest on accounts held for minors (custodial accounts) is reported on the child's tax return, not the parent's, even though the parent manages the account. If the child's interest income exceeds a certain threshold, it may be taxed at the parent's rate under "kiddie tax" rules, but it still reports on the child's return first.
Some savings accounts, particularly those offered by credit unions or certain municipal banks, may pay interest that is exempt from federal tax. The 1099-INT will indicate this in a separate box. Tax-exempt interest still appears on your return, but on a different line and doesn't count toward your taxable income.
How to track interest if you don't receive a 1099-INT
Your bank statement shows interest deposits each month. At the end of the year, add up all the interest deposits from January through December. That total is what you report on your tax return, whether or not you received a 1099-INT.
Most banks also provide a year-end summary in your online account or by mail. Log into your account in late December or early January and look for "Year-to-Date Interest" or "Interest Paid This Year" — the exact label varies by bank. Screenshot or print this summary as your documentation.
Keep your bank statements or year-end summary with your tax records for at least three years. If the IRS ever questions your return, you'll need to show where the interest figure came from.
Frequently Asked Questions
Do I have to report interest if I earned less than $10?
Yes. The $10 threshold only determines whether the bank sends you a 1099-INT form. You must report all interest income on your tax return, regardless of amount. The IRS expects you to track and report interest below $10 using your own bank records.
What if my bank didn't send me a 1099-INT but I know I earned interest?
Report the interest on Schedule 1 using your bank statement or year-end summary as documentation. You don't need the 1099-INT form to report the income — the form is just the bank's way of notifying you and the IRS. If you have your own records showing the amount, that's sufficient.
Can I deduct savings account interest as a loss if I owe more than I earned?
No. Interest income is always reported as positive income. You cannot deduct interest you didn't earn or offset it against other income. If you earned $5 in interest, you report $5 as income — there's no deduction available.
Do I report interest from a high-yield savings account differently?
No. High-yield savings accounts, money market accounts, and regular savings accounts all report interest the same way on Schedule 1. The interest rate doesn't change how you report it — only the amount matters.
What if I closed my account mid-year and earned interest before closing?
Report all interest earned in that calendar year, even if you closed the account in June. The bank will include the interest through the closing date on your 1099-INT (if applicable) or your final statement. Report the full year-to-date amount on your tax return.