Do I need to report interest less than $10 to IRS and indicate on 1040?

[TomYoung · Accepted solution]

Yes.  Although payers don't have to provide a 1099-INT for amounts under $10 that doesn't relieve you of the obligation to report it.

Just report it "as if" you received a 1099-INT.  There's no problem reporting it this way.  If you look at Schedule B there's nothing there that says "this was reported on a 1099-INT."  It's just the payer's name and the dollar amount.

Tom Young

[gandrews89129]

I hope the previous respondent doesn't do anyone's taxes!!  If a financial institution (and I've worked for several) is not required to report any interest under $10 to the IRS why would a taxpayer be required to report it!  That is just ludicrous!  Where would the IRS get the information from?  Obama?    Seriously, that would make financial institutions party to tax evasion and would put citizens at risk of audits, and would leave banks subject to fines.  Are you kidding me Mr Tom Young?    YOU DO NOT REPORT INTEREST earned under $10 period, because the banks do not report it.   And it is NOT AGGREGATE it is PER ACCOUNT.  If you have 3 savings accounts and each earned $9.99 cents, you DO NOT REPORT IT-PERIOD!

[TomYoung]

A well-written rebuttal to a position or opinion one has posted is a rebuttal that’s moderate in tone, amply supported by cites to authoritative references, and gently corrects the author in a manner that does not impune the author's intelligence.   Such a rebuttal is a joy to read and strengthens your belief that people can disagree rationally and in good faith.

I’m sorry I can’t say that about yours.

You may want to correct the IRS here, too, (and they do prepare income tax returns for others), when they state in Pub 17: “Gross income.    This includes all income you receive in the form of money, goods, property, and services that is not exempt from tax."

And, even more directly:

"You must include all taxable interest in your income on your federal income tax return, even if you don't receive a Form 1099-INT or 1099-OID."

[phaser1]

This has been addressed by Tom (?) already, but to not put too fine a point on it, what you are suggesting is against the law.  Yes, you might not get caught, but you would be breaking the law not reporting interest income of any amount.

[VolvoGirl]

And 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.

[Anonymous]

FI's may not issue the taxpayer a 1099-Int for under $10.  that doesn't mean they don't report it to the IRS. 

the first thing we learn in tax school is that all income is taxable from whatever source derived unless exempt by law.  you will not find anywhere in the Internal Revenue Code, Regulations, or any other authoritative literature that a taxpayer can omit reporting a taxable interest payment of under $10.   do some taxpayers omit reporting such n amount - sure.  but it gets more problematic if a  taxpayer has 2 a/c's each earning $9.99 at the same FI and registered under the same SSN.  the bank may file one 1099-int with the IRS reporting $19.98 

[k14turck]

By your logic if someone has 100 accounts and spreads money across them such that they only earn $9.99 interest in each they then earn $999 of tax free interest. Does that seem right? No it doesn't because it's tax evasion. You need to report any and all income regardless of whether you have a form or not, it's common sense. 

[turbanana]

VolvoGirl - $6 in interest and the tax went up $12 ??? That does not seem right. Whatever amount went into the next bracket should be taxed at a higher bracket rate. Even if the entire $6 went to the next tax bracket, you should not taxed 200% on that.

[maldenwjr822]

I googled this and found this old post.  Wanted to respond to the gandrews89129 wrote in case anyone found it and took it's advice.  A payor (bank or credit union, etc.) does report an aggregated total of the interest earned on all of the accounts that fall under the primary owner's SSN/TIN.  It is not per account it is per all interest earned at a bank under the SSN/TIN.

[LindaS5247]

Yes, Box 1 of Form 1099-INT reports the taxable amount of interest to a payee.  This box includes amounts $10 or greater paid to an individual's savings account, bank deposits, dividends paid by a life insurance company, and a variety of other interest. This box also includes interest of $600 or more paid in the course of a trade or business.

Per the IRS instructions for Form 1099-INT, File Form 1099-INT for each person: 

To whom you paid amounts reportable in boxes 1, 3, and 8 of at least $10. For whom you withheld and paid any foreign tax on interest.

Even if you did not receive a Form 1099-INT, or if you received interest under $10 for the tax year, you are still required to report any interest earned and credited to your account during the year. The interest earned is entered in the Investment Income section of the program.

Click here for Form 1099-Int instructions.

[ken120]

Thanks.  I think TurboTax should put some guidance about this on the 1099 screen, but that's a different problem.  I am now tracking down my bits and pieces of interest from small credit union accounts.

[13thAmendment]

Technically yes.

It would take a really ornery tax agent to charge you with tax evasion. And then a really ornery tax agent's supervisor to keep pushing it.

They have bigger fish to fry IMO.

[SharonD007]

Yes, even though you may not have received a 1099-INT, you are still responsible for reporting the income. For further information, review the TurboTax Help articles: What if I didn't get Form 1099-INT from my bank? and Filing Tax Form 1099-INT: Interest Income.