Yes. Reporting interest income less than $10 is required, because federal law treats interest of any amount as gross income.1Office of the Law Revision Counsel. 26 USC 61 – Gross Income Defined The $10 figure that causes the confusion is a rule for banks, not a tax-free allowance for you. Below that amount, your financial institution doesn’t have to send a Form 1099-INT, but the income is still taxable and still belongs on your return.
What the $10 Rule Actually Controls
A bank, credit union, or brokerage must issue Form 1099-INT whenever it pays you $10 or more in interest during the calendar year, and that form must reach you by January 31.2Internal Revenue Service. About Form 1099-INT, Interest Income3Internal Revenue Service. General Instructions for Certain Information Returns Below $10, the institution has no filing obligation. That threshold exists to spare banks from generating millions of forms for pennies of interest. It is an administrative convenience for them, not a safe harbor for you.4Internal Revenue Service. Topic No. 403, Interest Received
So if your savings account earned $5.75 last year and no 1099-INT arrived, that $5.75 is still interest income. The IRS position is clear: report all taxable interest, regardless of whether a form was issued.
You May Not Have to File a Return at All
The reporting obligation only bites if you’re filing a return in the first place. You’re required to file when your total gross income crosses the filing threshold, which generally matches the standard deduction. For 2026, that’s $16,100 for a single filer and $32,200 for married couples filing jointly.5Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
If your only income for the year is $8 in savings interest, you’re well under the filing line and don’t need to file. The small-interest question matters most when you already have wages, retirement distributions, or self-employment income that puts you above the threshold. In that situation, leaving off a few dollars of interest creates an underreporting gap the IRS can pick up.
Finding the Number Without a 1099-INT
When no form arrives, the year-end account statement does the work. Every bank, credit union, and brokerage lists the total interest credited during the calendar year, either on the December statement or a separate annual summary. Most online banking portals also show a year-to-date interest figure; make sure you’re looking at the final December number rather than a mid-year snapshot.
Pull the total from every account that earned anything: checking, savings, money market, CDs. Add them together. That sum is your reportable interest. Save or download the statements with the rest of your tax records.
Interest is taxable in the year it’s credited, not the year you withdraw it. If your bank posts $7.50 to your account in December 2026, that’s 2026 income even if the money sits there untouched until March 2027.6eCFR. 26 CFR 1.451-2 – Constructive Receipt of Income Use the credited figures from your December statement, not withdrawal amounts.
Rounding is allowed. Amounts under 50 cents round down; 50 cents and up round up. Add the exact figures across accounts first, then round the total. A single account that earned $0.43 and nothing else rounds to zero, though you should still keep the documentation.
Where Interest Goes on the Return
All taxable interest goes on Line 2b of Form 1040, whether it came from a 1099-INT or from your own account statements. If your total taxable interest across all accounts is $1,500 or less, enter the figure directly on Line 2b and you’re done.7Internal Revenue Service. Schedule B (Form 1040)
Above $1,500, you fill out Schedule B, listing each payer and the amount received; the combined total then flows to Line 2b.8Internal Revenue Service. About Schedule B (Form 1040), Interest and Ordinary Dividends Schedule B is also required if you had a financial interest in a foreign bank account or received distributions from a foreign trust, regardless of the dollar amount.
Tax-exempt interest, such as interest from municipal bonds, is reported separately on Line 2a. It isn’t added to your taxable income, but the IRS still wants to see it because it can affect other calculations, including how much of any Social Security benefits become taxable.9Internal Revenue Service. Instructions for Schedule B (Form 1040)
What Happens If You Leave It Off
The IRS matches 1099-INT forms to returns by computer. Miss one that was actually issued and you’ll typically hear about it through a CP2000 notice proposing additional tax. For interest under $10 where no form was generated, the risk of automated detection is lower, but audits and other information sources can still surface it.
When unreported interest is caught, the accuracy-related penalty is 20% of the tax you should have paid on the missing income.10Internal Revenue Service. Accuracy-Related Penalty Interest also runs on the unpaid amount from the original due date. On a handful of dollars, the actual penalty is small. It grows if the omission is part of a pattern across multiple accounts or years.
Situations Where the Rules Shift
Interest Paid on a Tax Refund
If the IRS or a state tax authority paid you interest on a delayed refund, that interest is taxable. It sometimes arrives on a separate 1099-INT months after the refund itself, and the amounts are often small enough to overlook.4Internal Revenue Service. Topic No. 403, Interest Received It still goes on Line 2b.
Savings Bonds
Series EE and I bonds let you choose when to report interest. Most people defer until the bond is cashed or matures; you can also elect to report the interest as it accrues each year.11TreasuryDirect. Tax Information for EE and I Bonds Switching from deferral to annual reporting doesn’t require IRS permission, but it applies to all bonds tied to your Social Security number and requires you to include all previously unreported interest in the switch year. For small annual bond interest, deferring is usually simpler: one 1099-INT arrives when you redeem, and you report the total then.
Backup Withholding
If you never gave the bank a valid taxpayer identification number, it must withhold 24% of your interest and send it to the IRS.12Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide When that happens, you’ll get a 1099-INT showing both the interest and the amount withheld, even if the interest was under $10. The withholding becomes a credit you claim on your return, so filing is the only way to recover it. A correct W-9 on file with the bank prevents backup withholding from starting in the first place.
Children’s Accounts
The same reporting logic applies to a child’s savings or custodial account. A dependent with only unearned income must file a separate return once that income exceeds $1,350 for 2025; the threshold adjusts annually and may be slightly higher for 2026.13Internal Revenue Service. Check if You Need to File a Tax Return Below that level, no return is required for the child.
If a child’s total investment income stays under $13,500, a parent can elect to include it on the parent’s return using Form 8814 rather than filing a separate return for the child.14Internal Revenue Service. Instructions for Form 8814 There’s a trade-off: the first $2,700 of the child’s income can end up taxed at the parent’s rate rather than the child’s lower rate. For a child with only a few dollars of interest, the convenience of skipping a separate return usually outweighs the small tax cost.
How Long to Keep the Records
Keep year-end statements, interest summaries, and any 1099-INTs for at least three years from the date you filed the return.15Internal Revenue Service. Topic No. 305, Recordkeeping That’s the standard window during which the IRS can assess additional tax. If you filed claiming a refund, the retention period is three years from filing or two years from the date you paid the tax, whichever is later.16Internal Revenue Service. How Long Should I Keep Records Digital copies stored with your other tax documents are fine.