How To Report Interest Income

Generally, you report all of your taxable interest income on line 8a, Form 1040; line 8a, Form 1040A; or line 2, Form 1040EZ.

You cannot use Form 1040EZ if your interest income is more than $400. Instead, you must use Form 1040A or Form 1040.

Form 1040A. You must complete Part I of Schedule 1 (Form 1040A) if you file Form 1040A and any of the following are true.

  1. Your taxable interest income is more than $400.
  2. You are claiming the interest exclusion under the Education Savings Bond Program (discussed earlier).
  3. You received interest from a seller-financed mortgage, and the buyer used the property as a home.
  4. You received a Form 1099-INT for tax- exempt interest.
  5. You received a Form 1099-INT for U.S. savings bond interest that includes amounts you reported before 2001.
  6. You received, as a nominee, interest that actually belongs to someone else.
  7. You received a Form 1099-INT for interest or frozen deposits.
List each payer's name and the amount of interest income received from each payer on line 1. If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer.

You cannot use Form 1040A if you must use Form 1040, as described next.

Form 1040. You must use Form 1040 instead of Form 1040A or Form 1040EZ if:

  1. You forfeited interest income because of the early withdrawal of a time deposit,
  2. You received or paid accrued interest on securities transferred between interest payment dates,
  3. You had a financial account in a foreign country, unless the combined value of all foreign accounts was $10,000 or less during all of 2001 or the accounts were with certain U.S. military banking facilities,
  4. You acquired taxable bonds after 1987 and choose to reduce interest income from the bonds by any amortizable bond premium (see Bond Premium Amortization in chapter 3 of Publication 550), or
  5. You are reporting OID in an amount more or less than the amount shown on Form 1099-OID.

Schedule B. You must complete Part I of Schedule B (Form 1040) if you file Form 1040 and any of the following apply.

  1. Your taxable interest income is more than $400.
  2. You are claiming the interest exclusion under the Education Savings Bond Program (discussed earlier).
  3. You had a foreign account.
  4. You received interest from a seller-financed mortgage, and the buyer used the property as a home.
  5. You received a Form 1099-INT for tax-exempt interest.
  6. You received a Form 1099-INT for U.S. savings bond interest that includes amounts you reported before 2001.
  7. You received, as a nominee, interest that actually belongs to someone else.
  8. You received a Form 1099-INT for interest on frozen deposits.
  9. You received a Form 1099-INT for interest on a bond that you bought between interest payment dates.
  10. Statement (4) or (5) in the preceding list is true.
On line 1, Part I, list each payer's name and the amount received from each. If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer.

Form 1099-INT. Your taxable interest income, except for interest from U.S. savings bonds and Treasury obligations, is shown in box 1 of Form 1099-INT. Add this amount to any other taxable interest income you received. You must report all of your taxable interest income even if you do not receive a Form 1099-INT.

If you forfeited interest income because of the early withdrawal of a time deposit, the deductible amount will be shown on Form 1099-INT in box 2. See Penalty on early withdrawal of savings in chapter 1 of Publication 550.

Box 3 of Form 1099-INT shows the amount of interest income you received from U.S. savings bonds, Treasury bills, Treasury notes, and Treasury bonds. Add the amount shown in box 3 to any other taxable interest income you received, unless part of the amount in box 3 was previously included in interest income. If part of the amount shown in box 3 was previously included in your interest income, see U.S. savings bond interest previously reported, later.

Box 4 of Form 1099-INT (federal income tax withheld) will contain an amount if you were subject to backup withholding. Report the amount from box 4 on Form 1040EZ, line 8, on Form 1040A, line 37, or on Form 1040, line 59 (federal income tax withheld).

Box 5 of Form 1099-INT shows investment expenses you may be able to deduct as an itemized deduction. See chapter 3 of Publication 550 for more information about investment expenses.

U.S. savings bond interest previously reported. If you received a Form 1099-INT for U.S. savings bond interest, the form may show interest you do not have to report. See Form 1099-INT for U.S. savings bonds interest, earlier, under U.S. Savings Bonds.

On line 1, Part I of Schedule B (Form 1040), or on line 1, Part I of Schedule 1 (Form 1040A), report all the interest shown on your Form 1099-INT. Then follow these steps.

  1. Several lines above line 2, enter a subtotal of all interest listed on line 1.
  2. Below the subtotal write "U.S. Savings Bond Interest Previously Reported" and enter amounts previously reported or interest accrued before you received the bond.
  3. Subtract these amounts from the subtotal and enter the result on line 2.

More information. For more information about how to report interest income, see chapter 1 of Publication 550 or the instructions for the form you must file.