Can you get taxed on the interest you earn on a savings account?

Answer by  Chaneygirl (1755)

Yes, savings account interest is taxable. If you earned less than $10 per year, you will not receive a reporting document 1099-int and neither will the IRS. Depending on the amount, it may not be worth amending (no tax due) if it is a small amount.

Answer by  cgroverla (516)

All interest earned on savings is subject to income tax. When interest payments are $10 or more, the bank will issue a 1099INT to you and send a copy to the IRS. If not included on the tax return, the IRS may issue a letter for payment. Small amounts of interest may not increase tax, and no notice is sent.

Answer by  EarlOfSandwich (177)

Interest earned from any bank account other than accounts held in an IRA or 401k plan is taxable. You should receive a 1099-INT form from the payer at the end of the year, and report the interest shown on line 8 of form 1040. If your total interest exceeds $1500 you will also need to file Schedule B.

Answer by  tamarawilhite (17883)

Yes. This is interest income and is taxed at the income tax rate. Your bank should send you a statement every year on how much interest is paid, and that same information has been sent to the IRS. It is possible that the interest has been so small that the IRS never acted, but it is legally owed.