Do I report "nonqualified interest" to the IRS?

[JulieH1]

Generally Yes.

Non-qualified interest is interest which is generally associated with an investment vehicle which is for some reason not qualified for a current tax deferral.

It is reported on a 1099-INT and should be reported to the IRS even if you do not get a 1099-INT. The IRS allows rounding, so an amount of 49 cents or less rounds to 0 and is not reportable. An amount of more than 49 cents is reportable and taxable.