You report the interest your savings account earns, not the account balance itself
The IRS does not care how much money sits in your savings account. It cares about the money your account makes. If your savings account earned interest during the year, you report that interest as income on your tax return. The account balance—whether it is $500 or $50,000—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 exact interest amount. You use this number when you file your taxes. If you earned less than $10, the bank does not send the form, but you still report the interest if you file a return.
The threshold of $10 is a reporting requirement for the bank, not a threshold for you. Even $1 in interest technically belongs on your return, though in practice the IRS focuses enforcement on larger amounts and people with other income sources.
Key Takeaways
- Banks report interest earnings on a 1099-INT form when interest reaches $10 or more in a calendar year.
- You report the interest amount as income, not the savings balance, and the IRS does not track how much money you hold.
- Interest from savings accounts, money market accounts, and certificates of deposit all count as taxable income.
- High-yield savings accounts generate more interest, which means more to report, but the reporting requirement works the same way.
How the 1099-INT form works and when you receive it
Your bank calculates the interest you earned from January 1 through December 31 and reports it on the 1099-INT by January 31 of the following year. The form shows the interest in Box 1. You receive a copy in the mail, and the bank sends a copy to the IRS at the same time.
If you have multiple savings accounts at different banks, you receive a separate 1099-INT from each bank. If you have multiple accounts at the same bank, that bank may combine them into one form or send separate forms depending on how the accounts are registered. Check the forms you receive to make sure the interest amounts match what your statements show.
If you do not receive a 1099-INT by early February, contact your bank. Banks sometimes mail them late, or the form may have gone to an old address. You can also log into your online banking and read the form directly from most banks' websites.
What counts as interest income you must report
Interest from a regular savings account, high-yield savings account, money market account, or certificate of deposit (CD) all count as taxable interest income. So does interest from a savings bond or any other account where the bank or issuer pays you for letting them hold your money.
Dividends from a savings account—which some banks call interest but label as dividends—also go on your tax return. The label does not matter; what matters is that the bank paid you money for holding your account with them.
Transfers between your own accounts do not count as income. Moving $5,000 from checking to savings is not taxable. Only the interest the money earns is taxable.
Interest from accounts held jointly or in trust
If you own a savings account jointly with another person, you and the other owner split the interest income for tax purposes. Each person reports their share on their own return. The 1099-INT the bank sends will show the total interest; you need to determine who reports what based on your ownership agreement or state law.
If you hold an account in trust for a minor child, the interest usually belongs to the child for tax purposes, not to you. The bank may issue the 1099-INT in the child's name and Social Security number. A child with interest income may need to file their own return, even if they have no other income, depending on the amount and whether they can be claimed as a dependent.
Custodial accounts (UTMA or UGMA accounts) work similarly: the interest belongs to the minor, and the child's Social Security number appears on the 1099-INT. The parent or custodian does not report this interest on their own return.
How interest income affects your tax filing
Interest income is added to your other income when you calculate your total taxable income. If you have a job, interest from savings gets added to your wages. If you are retired and live on Social Security, interest gets added to that amount.
For most people, the interest from a savings account is a small number—often under $100 per year. But if you have a large balance in a high-yield savings account, the interest can be several hundred or even thousands of dollars annually. This matters because it increases your total income, which can affect whether you owe taxes, how much you owe, or whether you stay under income limits for other tax benefits.
You report interest income on Schedule B (Interest and Ordinary Dividends) if you have more than $1,500 in interest and dividend income combined. If you have less than that, you can report it directly on your Form 1040. Your tax software or tax preparer will guide you to the right place.
When you do not have to file a return but still earned interest
If your total income is below the filing threshold for your age and filing status, you do not have to file a return—even if you earned interest. The IRS sets these thresholds each year, and they vary based on whether you are single, married, over 65, or claimed as a dependent.
However, if your employer withheld taxes from your paycheck, you may want to file anyway to get a refund. Similarly, if you earned interest and also had other income, you almost certainly need to file.
The safest approach: if you earned any interest and you are unsure whether you need to file, file anyway. Filing when you do not have to is never a penalty. Not filing when you should is.
Interest income and other tax situations
If you receive unemployment benefits, interest income counts toward your total income and may affect your tax liability. If you are on Social Security, interest can push you over the threshold where part of your benefits become taxable.
If you are self-employed, interest income is separate from your business income and does not affect your self-employment tax calculation. You report it as other income on your return.
If you are a student claimed as a dependent, interest income still belongs on your return. Depending on the amount, you may need to file even though your parents claim you. Your parents cannot claim the interest as their income just because they claim you as a dependent.
Frequently Asked Questions
Do I report my savings account balance or just the interest?
Only the interest. Your account balance is not income and does not go on your tax return. The IRS only cares about the money your account earned, not the money you put into it.
What if I earned less than $10 in interest?
The bank does not send a 1099-INT, but you still report the interest if you file a return. Check your year-end statement for the exact amount and include it on Schedule B or your 1040.
Do I have to report interest from a savings account I closed during the year?
Yes. Report all interest earned from January 1 through December 31, regardless of when you closed the account. The 1099-INT will show the interest earned before closure.
What happens if the bank's 1099-INT amount does not match my statement?
Contact your bank when ready. The amounts should match. If they do not, the bank may have made an error, or interest may have been posted after the form was generated. Get a corrected form if needed before you file.
Can I deduct savings account fees from the interest I report?
No. You report the full interest amount on your return. Fees are not deductible against interest income for most taxpayers. Report the interest as shown on the 1099-INT.