I have a certificate of deposit (CD) and a savings account. Together they only made $6.00 in interest. I haven’t received anything in the mail for filing purposes. Do you think it is OK to go ahead and file now? I have everything else besides those forms from the bank? Is $6 even worth mentioning?
In general, payors of interest income are only required to prepare and send Form 1099-INT when:
- The interest totals $10.00 or more per year
- Or, foreign tax was withheld on interest income.
- Or, federal income tax was withheld (and not refunded) under the backup withholding rules, regardless of the amount.
You say the total interest paid is only $6.00, so a 1099-INT is not required to be provided. It is OK to go ahead and file your form 1040 now. You can wrestle with your conscience whether to report the $6.00 on your tax return or not; interestingly, there is a small chance that it might incur $6.00 or more of additional tax due to the way the tax tables work.
For instance, if you are married filing a joint return and your taxable income without the $6.00 of interest income is $51,997, according to the tax tables your tax is $6,864. If you add the $6.00, making your income $52,003, then your tax becomes $6,871 or $7.00 more. You would have paid 117 percent tax on the additional $6.00.
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Answered by: James D. Adelsperger, CPA, is senior wealth adviser with Domani Wealth in Lancaster, Pa.