Should I report on my taxes a small amount of interest that was made from my savings?

Should I report on my taxes a small amount of interest that was made from my savings?

by James D. Adelsperger, CPA | Feb 07, 2018

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.

For more resources, check out PICPA’s Money & Life Tips, Ask a CPA, or CPA Locator.

Answered by: James D. Adelsperger, CPA, is senior wealth adviser with Domani Wealth in Lancaster, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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