Taxpayer asks:

The 1099-INT instructions state, payers of interest of $10 or more are required to furnish you and the IRS with this tax information. The IRS is notified of all interest paid by financial institutions on magnetic media, but financial institutions only report interest of $10 or more. I have seen some sites state, “If you do not include your interest income on your tax return the IRS will know when their computer system matches your tax return to the tax information provided by payers.” Which I believe is incorrect because if payers/financial institutions only report interest of $10 or more then how will the IRS or their computer system match your tax return to a 1099-INT reporting less than $10 when such a 1099-INT was not provided to the IRS?

I have yet found an IRS document addressing the individual tax filer if they are still to report interest less than $10. Are individuals to report interest less than $10 even though payer does not provide a 1099-INT to the IRS?

Taxgirl says:

The $10 threshold is supposed to be for the sake of administrative ease. The tax associated with interest of $10 or less is so insignificant that reporting this interest is not required by the financial institution.

That said, some financial institutions find it administratively more efficient to run all of the reports, regardless of the amount. The bank that holds my children’s passbook savings accounts (yes, they still exist – and the kids love the passbook!) issues a 1099-INT for each of the accounts every year despite the fact that the interest is only a few dollars.

If I receive a 1099-INT, I always report it, regardless of the amount. I can’t imagine why you wouldn’t – it’s easy enough to include it and that way, all of the numbers match up on the return with what the IRS has on file.

If you are required to file a tax return, you should report all income from all sources whether you receive a corresponding form or not. So, regardless of whether you receive the form 1099-INT, you should report the interest. Again, the tax consequence of doing so is quite minimal.

All of that said, I have never heard of a client who was audited for not reporting interest less than $10 which was reported on a form 1099-INT. This doesn’t mean that it hasn’t happened, just that I haven’t heard of it. I personally wouldn’t recommend it – you are responsible for reporting the interest irrespective of the amount and I’m not sure why you would risk having your return potentially flagged over less than $10.

Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
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Kelly Phillips Erb is a tax attorney, tax writer, and podcaster.


  1. Thanks for the info, I guess I’ll have to report it. But this is crazy – if I had just received the 1099-INT for less than $10, I would have just entered it into TurboTax and it would have been done in 1 minute. Instead I went looking through Capital One’s website to see if I could access my 1099-INT (doesn’t look like it), and then Google around trying to figure out why I might not have received one. Then found out about this $10 rule and then had to Google about whether the under-$10 amount is still taxable.

    And others have apparently called their banks trying to figure out where there 1099-INT went – is this really saving administrative expense?

  2. I think the key component of this question is “when there IS NO 1099-INT from the bank,” in this case Capital One, can one assume that the bank in fact did not file that amount with the IRS. And as a consequence of not reporting the amount to the IRS, the IRS then has no idea of the interest and therefore won’t hold the recipient of the interest to paying the tax on that interest.

    Put yourself in the shoes of these banks. If they don’t report that interest paid to you, they are liable, especially if someone like you who comes along and files it to the IRS. So trust me–they filed it on their side. What they did not do is to send you a copy of 1099-INT because they are trying to save money at your expense (surprise surprise), making you having to dig up your statements and figure out the interest to file to the IRS with. Nobody is doing you any favors here, especially the banks. I wish there were no loopholes for that $10 minimum for banks to send out 1099-INT, but some lobbyist did their job well to convince the law makers to put in place that loophole to help the banks save money. Again, at your expense.

    The best way to get back at the banks is to call up the banks and talk to representatives. Use up their support lines. When they do their bottom line calculations (you know they will) and realize it costs them more money to answer support calls regarding this than to just do their job and send out the 1099-INT in the first place, they will volunteer to send them out the next time around.

  3. Well this year we have one bank that paid us a whopping 72 cents in interest. Another paid us a meager $2.36. I sure do wonder if they will send a 1099-INT to us. For one I went into my online banking and no tax form was available today 02/06/17 which is after the date they are supposed to send them out. Can I assume they will not send one out ? What about the 72 cent one ? This is all a joke as far as I think.

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