How to report Interest earned from Donut

Forum|Forum|3 years ago
April 8, 2023
3 replies
11 views

How should i report interest earned from Donut App ? I live in Massachussetts what should i select on next question "Do any of these uncommon situations apply?" As it is not bank interest.

TurboTax Deluxe Online

ThomasM125

Level 15

I'm not sure what the options are on the screen you are looking at so I can't suggest an answer, but you should enter the interest income in the federal section of TurboTax as follows:

Choose the Federal option on your left menu bar
Choose Wages & Income
Look for Interest and Dividends
Choose Interest on 1099-INT

Even though you don't have a Form 1099-INT, you can report the interest in that section. It will flow down to your state return.

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chatumohAuthor

Level 2

This donut app offers high yield interest rate plans and it uses its lending partners to put USDC crypto via DeFi as collateral to earn interest. I have earned only $80 interest which is still in donut app account i never withdrew yet. Do i need to declare this interest on tax forms even i have not withdrawn or transferred to my bank account?

This interest will not be considered bank interest ? And the money i put in high yield saving plan is not DeFi lending?

the next screen shows question- Do any of the uncommon situation apply?

Do any of these uncommon situations apply?

I need to adjust the interest reported on my form. Learn more

My state (ME, MD, MA, NH, NJ, or WV) doesn't tax all of this interest. Learn more

State

Massachusetts bank interest

None of these apply.

GeorgeM777

Level 11

Yes, even though you have not withdrawn your interest from the Donut app, you still need to report it on your tax return. You are correct in that the interest was not paid by a traditional bank; however, based on your post, it has the characteristics of interest in that it was income earned on assets held and owned by you. Thus, it seems reasonable to report this income as interest.

Regarding the uncommon situations screen, it appears that none of them apply to you, so you can select the option None of these apply. Thereafter, this interest will appear on Schedule B to Form 1040.

@chatumoh

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