How To Report Interest Income
Interest is the payment that you receive for letting someone else use your money.
Typically you will receive Form 1099-INT from anyone who pays you $10 or more in interest.
The IRS requires that you report on your tax return all interest received even if you do not receive a 1099-INT.
Taxable and Non-Taxable Interest
While you are required to report all interest that you receive, not all of that interest is necessarily taxable.
Most interest received from state municipal bonds is tax free as is the interest from tax-exempt mutual funds.
Generally, all other interest is taxable.
How to Report Interest Income
You report interest income of $1,500 or less directly on your tax return.
Interest of $1,500 or more is reported on Schedule B for Form 1040 filers or Schedule 1 for Form 1040a filers.
Additionally, certain types of interest income including tax-free interest, foreign investment interest, and interest from seller-financed mortgages are reported on Schedule B or Schedule 1 regardless of their amount.