Yes, you must report savings account interest as income

Any interest your savings account earns counts as taxable income. The bank or credit union will send you a form called a 1099-INT at the end of the year if you earned $10 or more in interest. You report this amount on your tax return, even if you did not receive the form.

The IRS considers interest income the same way it considers wages — money that came to you, so you owe tax on it. The amount is usually small (often a few dollars a year on a regular savings account), but the reporting requirement is the same whether you earned $10 or $100.

If you earned less than $10 in interest, the bank will not send you a 1099-INT, but you still report what you earned. You can find the exact amount in your account statements or by logging into your online banking.

Key Takeaways

  • Banks send a 1099-INT form only if you earned $10 or more in interest during the year, but you must report all interest income regardless of the amount.
  • Interest counts as taxable income on your federal tax return and on most state tax returns.
  • You can find your interest earnings in your monthly statements or your year-end account summary from the bank.
  • High-yield savings accounts earn more interest than regular savings accounts, which means a larger amount to report but also more money in your account.

When the bank sends you a 1099-INT form

The 1099-INT arrives by mail or email in January or early February. It shows the total interest you earned in the previous year across all accounts at that bank. If you have accounts at multiple banks, you will receive a separate 1099-INT from each one.

The form lists the interest amount in Box 1. This is the number you use when you file your taxes. Keep the form with your tax records, and give a copy to whoever prepares your taxes if you use a tax preparer.

If you do not receive a 1099-INT by mid-February and you earned interest, contact the bank directly. Ask them to send it or to confirm the amount you earned. You will need this information to file your return accurately.

How to report interest on your tax return

If you file your own taxes using software like TurboTax or TaxAct, the program will ask you about interest income. You enter the amount from your 1099-INT (or your account statement if you did not receive a form), and the software puts it in the right place on your return.

If you file a paper return using Form 1040, interest income goes on Schedule 1, line 8. If you use a tax preparer, give them your 1099-INT forms and they will handle the reporting.

The interest is added to your other income for the year, which may affect your tax bracket or your may be able to access for certain tax deductions. This is one reason why keeping track of all your income sources matters.

Interest from joint accounts and accounts for minors

If you own a savings account jointly with someone else, the bank may split the interest between you on separate 1099-INT forms, or it may report all of it to one person. Check your form to see whose name and Social Security number it shows. If the split is wrong, contact the bank to correct it before tax time.

If you opened a savings account for a minor child, the interest is the child's income, not yours. The bank will issue a 1099-INT in the child's name and Social Security number. The child (or their parent or guardian filing on their behalf) must report it on their tax return.

State taxes and interest income

Most states tax interest income the same way the federal government does — you report it on your state tax return. A few states do not have income tax at all, so you would not owe state tax on the interest, though you would still owe federal tax.

If you live in one of the states without income tax (currently Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, or Wyoming), you still report the interest on your federal return. Check your state's tax website or ask a tax preparer if you are unsure whether your state taxes interest.

What happens if you do not report interest income

The IRS receives a copy of every 1099-INT that banks send out. If you do not report the interest on your return, the IRS will notice the mismatch between what the bank reported and what you reported. This can trigger a notice asking you to explain the difference or pay additional tax plus penalties.

Even small amounts matter. Failing to report $15 in interest might seem insignificant, but it creates a discrepancy the IRS can flag. It is simpler and safer to report all interest, no matter how small.

Frequently Asked Questions

What if I earned less than $10 in interest?

You still report it on your tax return. The $10 threshold only determines whether the bank sends you a 1099-INT form. You find the amount in your account statements and report it yourself.

Do I report interest from a money market account the same way?

Yes. Money market accounts, savings accounts, and certificates of deposit (CDs) all generate interest that you report as income. The bank sends a 1099-INT for any of these if you earned $10 or more.

Can I deduct the taxes I pay on interest income?

No. Interest income is taxed as ordinary income, and you cannot deduct it. However, if you have investment losses or certain other deductions, those may reduce your overall tax bill.

What if the 1099-INT shows the wrong amount?

Contact the bank when ready and ask them to issue a corrected form (called an amended 1099-INT). Once you receive the corrected form, file an amended tax return if you already filed. Do this as soon as you notice the error.

Does interest from a high-yield savings account get reported differently?

No. High-yield accounts earn more interest, so you report a larger amount, but the process is identical. You receive a 1099-INT if you earned $10 or more and report the interest on your tax return.