What Is the Minimum Reportable Interest Income on a Bank Account Reportable to IRS?
When you re earning interest on bank accounts or investments, the payer notifies the Internal Revenue Service, and you must declare the full amount on your tax return. The tax rules set minimum amounts, however, below which your bank or other payer is not required to report. When completing your tax return, you should keep in mind some important rules covering taxable interest.
Reporting on Form 1099-INT
Each year your bank will complete Form 1099-INT to report interest it pays. The bank is not required to report interest payments of less than $10, nor is it required to report interest paid to an individual retirement arrangement, or IRA; a health savings account, a Medicare Advantage savings account or an Archer Medical Savings Account. The IRS does not require reporting of interest paid on personal loans or interest paid outside of the U.S. by a non-U.S. payer.
Minimum Income for Filing
If your income, including interest, falls below certain minimum amounts, you may not need to file a tax return at all. For tax year 2014, for example, single taxpayers under 65 years of age earning less than $10,150 don t need to file a return. The minimum rises to $20,300 for joint filers who are both under 65; $21,500 if one spouse is older than 65; and $22,700 if both spouses are over 65. However, the IRS requires a return under special circumstances, no matter your income level, if you owe taxes on a retirement plan, you had self-employment income of $400 or more, you received a distribution from a health savings account or you owe employment taxes for domestic help.
Reporting Interest on Form 1040
The IRS requires you to report interest on Line 8 of Form 1040. Line 8a is for taxable interest, while Line 8b is for tax-exempt interest, which would not include regular bank accounts. If your total interest from all sources is more than $1,500 for the tax year, you must also file Schedule B to itemize these payments and carry the amounts from that form over to your 1040. Interest income, along with other types of income listed on the front of your 1040, goes into your adjusted gross income amount.