How to Find All Your Interest Income for Taxes
Ensure your tax return is complete by learning a systematic approach to identify all your taxable interest, including earnings you might have overlooked.
Interest income is the money you earn from allowing an entity, such as a bank or brokerage, to use your funds. This income is taxable and must be reported to the Internal Revenue Service (IRS) on your annual tax return. Failing to report all interest income can lead to penalties from tax authorities. Tracking this income throughout the year helps ensure you have an accurate total for your tax filings.
Reviewing Official Tax Documents
By late January or early February, you should receive tax forms from financial institutions that paid you interest. The most common document is Form 1099-INT, which institutions must send if they paid you $10 or more in interest. You are required to report all interest income, even if the total from a single source is less than $10 and you do not receive a form.
On Form 1099-INT, Box 1 shows the total taxable interest you received from the payer. Box 3 reports interest from U.S. Savings Bonds and Treasury obligations, which is subject to federal tax but generally exempt from state and local taxes. Box 8 shows tax-exempt interest, often from municipal bonds, which is not taxed federally but may be taxed by your state or locality.
You might also receive Form 1099-OID, Original Issue Discount, for products like zero-coupon bonds purchased for less than face value. The discount is treated as interest earned over the bond’s life. The amount shown in Box 1 or Box 2 of this form must be reported as interest income for the year, even if you have not received the cash payment.
Searching Your Financial Accounts
If you lose a tax form or do not receive one because your interest was under the $10 threshold, you must find the information yourself. Your monthly or quarterly bank statements are a primary source for this. Review each statement from the year for line items such as “Interest Paid” or “Interest Earned” and add these amounts to find the total for each account.
You can also use the online portals provided by your bank or brokerage firm. After logging in, look for a section labeled “Documents,” “Statements,” or “Tax Information.” Many institutions provide year-end summary statements that consolidate all your earnings and offer digital copies of any 1099 forms they issued. Some online dashboards also display a running total of year-to-date interest earned.
Accounting for Less Common Interest Sources
Interest income can come from sources other than traditional bank and brokerage accounts. If you loan money to a person or business, any interest they pay you is taxable income. For significant loans over $10,000 where you do not charge interest, the IRS may require you to report “imputed interest” based on minimum rates set by the government, known as Applicable Federal Rates (AFRs).
Interest can also arise from seller-financed property sales where the buyer makes payments to you over time. A portion of each payment is interest, which is taxable income you must report. You will need to consult your loan amortization schedule to separate the principal and interest portions of the payments.
When you cash in U.S. Savings Bonds, the earnings are considered interest income. The difference between the purchase price and redemption value is the interest earned, which may have grown tax-deferred for years. The financial institution processing the transaction or the TreasuryDirect website will issue a Form 1099-INT to report this income in the year you receive the funds.