You report the interest your savings account earns, not the account balance itself
The IRS wants to know about interest income — the money your bank pays you for keeping money there — but not about the savings balance sitting in the account. If your savings account earned $10 in interest last year, you report that $10. The $5,000 you kept in the account stays private between you and your bank.
Banks send you a form called a 1099-INT each January if your account earned $10 or more in interest during the previous year. This form lists the interest amount and goes to both you and the IRS. You then report that same number on your tax return. That is the basic requirement.
The reason the IRS cares about interest is that interest is income — it is money you earned, even though you did not work for it. The same way you report wages from a job, you report interest from savings. The IRS taxes most types of income.
Key Takeaways
- You report interest earned on a savings account, not the account balance itself, and only if the interest was $10 or more during the year.
- Your bank sends you a 1099-INT form in January showing the interest you earned, and you report this amount on your tax return.
- Interest income is taxed as ordinary income at your regular tax rate, so higher interest rates mean higher taxes owed.
- If you earned less than $10 in interest, you still report it if you owe taxes overall, but the bank does not send you a form.
How the 1099-INT form works
In late January or early February, your bank mails or emails you a 1099-INT if you earned $10 or more in interest during the previous calendar year. The form shows your name, address, and the exact interest amount in Box 1. You receive a copy, your bank keeps a copy, and a copy goes to the IRS.
You do not have to do anything with the form except keep it with your tax records. When you file your tax return, you report the interest amount from Box 1 of the 1099-INT on Schedule B (if you have other investment income) or directly on your Form 1040 (if it is your only interest income). The number you report should match the number on the form the IRS received.
If you have multiple savings accounts at different banks, you will receive a separate 1099-INT from each bank that paid you $10 or more. You add up all the interest from all the forms and report the total on your tax return.
What happens if you earned less than $10 in interest
Your bank does not send you a 1099-INT if you earned less than $10 in interest during the year. However, you still have to report that interest on your tax return if you owe taxes overall. The IRS requires you to report all income, even small amounts that do not trigger a form.
You can find the interest amount in your bank statements or by logging into your online account. Most banks show interest earned in a monthly or annual summary. If you cannot find it, call your bank and ask for the total interest paid to your account during the tax year.
How interest income affects your tax bill
Interest from a savings account is taxed as ordinary income, meaning it is added to your other income (like wages) and taxed at your regular tax rate. If you earn $50,000 in wages and $500 in savings interest, the IRS treats you as having $50,500 in income.
The higher your tax bracket, the more you owe on that interest. Someone in the 22% tax bracket owes roughly $110 in federal taxes on $500 of interest. Someone in the 12% bracket owes roughly $60 on the same $500. State income taxes may explore as well, depending on where you live.
This is why high-yield savings accounts matter: they pay more interest, which means more income to report, but also more money in your pocket after taxes. A regular savings account paying 0.01% interest generates almost no taxable income. A high-yield account paying 4% or 5% generates enough interest that you will definitely owe taxes on it.
Joint accounts and accounts held by minors
If you own a savings account jointly with someone else, the bank reports the full interest amount on a 1099-INT to whoever is listed first on the account. That person is responsible for reporting it, but they should split the income with the co-owner on their tax return if they each own half the account. The co-owner reports their share on their own return.
If a parent opens a savings account for a minor child, the bank reports the interest on a 1099-INT in the child's name and Social Security number. The child (or the parent filing on the child's behalf) reports this interest on the child's tax return. A child with very little income may not owe taxes overall, but the interest still has to be reported.
Reporting interest when you file your taxes
The exact place you report savings interest depends on how much you have and what other income you earned. If you have less than $1,500 in total interest and dividends combined, you report it directly on Form 1040, line 2b. If you have more than $1,500, you use Schedule B to list each source of interest separately.
Most people use tax software (like TurboTax or IRS Free File) that walks you through this step. You enter the amount from your 1099-INT, and the software puts it in the right place on your return. If you file by hand or with a tax preparer, they will ask you for your 1099-INT forms and handle the reporting.
The key is matching the number on your 1099-INT to the number you report. If the IRS receives a 1099-INT showing $500 in interest but your return shows $400, you will likely get a notice asking you to explain the difference.
Special situations: IRAs, CDs, and money market accounts
Interest earned inside a traditional IRA is not reported on your taxes each year — it grows tax-deferred until you withdraw money in retirement. Interest in a Roth IRA is never taxed, even when you withdraw it. So if you have savings in an IRA, you do not report the interest annually.
Interest from a certificate of deposit (CD) is reported the same way as savings account interest: on a 1099-INT if it is $10 or more. A money market account also generates a 1099-INT. The account type does not matter — the IRS cares about the interest earned, regardless of where it sits.
If you withdraw money from a CD before it matures, you may owe an early withdrawal penalty. That penalty is separate from the interest and is reported on a different line of your tax return, but it does not change how you report the interest itself.
Frequently Asked Questions
Do I have to report my savings account balance on my taxes?
No. The IRS does not care how much money you have in savings. You only report the interest the account earned. A $100,000 balance earning no interest generates no tax reporting requirement. A $1,000 balance earning $50 in interest requires you to report that $50.
What if my bank did not send me a 1099-INT but I earned interest?
If you earned less than $10, your bank is not required to send a form, but you still report the interest on your return if you owe taxes overall. If you earned $10 or more and did not receive a form by early February, contact your bank and ask them to send it. You can also call the IRS at 800-829-1040 if the form does not arrive.
Can I deduct savings account fees from the interest I report?
No. You report the full interest amount shown on your 1099-INT. Fees your bank charged you are not deductible against the interest. However, if your bank charged you fees that exceeded your interest (so you had a net loss), you cannot report a negative number — you straightforward report zero interest.
Do I owe taxes on interest if I am unemployed or retired?
Yes. Interest is income regardless of your employment status. If you earned $10 or more in interest, you report it. Whether you owe taxes overall depends on your total income and your filing status, but the interest must be reported either way.
What if I moved during the year and my address changed?
Make sure your bank has your current address so the 1099-INT reaches you. If you moved and did not update your address with the bank, the form may go to your old address. Contact your bank with your new address and ask them to resend the form if needed. You can also find the interest amount in your online account or bank statements.