topic Federal Interest Payment in Deductions & credits

Federal Interest Payment

BillnSuz — Mon, 20 Jul 2020 19:03:55 GMT

I know that if a bank pays interest of less than $10 in the tax year I don't have to declare it. But what if the IRS pays me interest on my 2019 refund of less that $10, do I need to report that on my 2020 return?

Re: Federal Interest Payment

Texas Roger — Mon, 20 Jul 2020 19:08:04 GMT

You must include all interest your receive from any source regardless of whether you received a 1099-INT or not. See this previous reply: https://ttlc.intuit.com/community/taxes/discussion/do-i-need-to-report-interest-less-than-10-to-irs-and-indicate-on-1040/00/32589

Re: Federal Interest Payment

Anonymous — Mon, 20 Jul 2020 19:12:23 GMT

all interest that is taxable is reportable even if you do not receive a 1099. there is no rule that says under $10 isn't taxable only that the payor doesn't have to file. Most definitely the IRS would notice the ommission but if you use the tax tables a $10 change in your income might not produce and change in your taxes

for example, a single taxpayer with a taxable income of $20000 to $20049 would pay $2209 in federal taxes at $20050 that same taxpayer would pay $2215

Re: Federal Interest Payment

Opus 17 — Mon, 20 Jul 2020 19:28:56 GMT

I believe the bank is not required to issue a 1099-INT if the amount is less than $5, not $10. Regardless, you are required to report and pay tax on all your income, even if you don't get paperwork. You might not get caught, if the amount is small, but that's not a bet I would take when the payer is the IRS itself.

Re: Federal Interest Payment

VolvoGirl — Mon, 20 Jul 2020 19:34:12 GMT

See pub 550 page 16 last paragraph Form 1099-INT....

You must report all your taxable interest income even if you do not receive a Form 1099-INT.

https://www.irs.gov/pub/irs-pdf/p550.pdf

I once added $6 in interest and the tax went up $12! It pushed me into the next tax bracket. I was right at the line.

Re: Federal Interest Payment

BillnSuz — Mon, 20 Jul 2020 20:12:21 GMT

Good answer. I live in Vegas, and I guess not getting audited would be a bet that I wouldn't take.

It isn't worth it for a $6 increas in income.

Thanks.