A common stream of revenue that you might not realize you have is the interest paid on your savings accounts. Granted, it usually doesn't add up to a lot, but you do need to report it on your tax forms or it could cause you trouble should you be audited.
Determine How Much Interest You Received
Any entity that paid you interest during the year should send you a Form 1099-INT in the mail. This is a form that reports interested income paid to you. Not only do you receive a copy, but so does the Internal Revenue Service if you were paid more than $10 in interest from that payer. If you don't want to wait for the form, you should be able to find the amount of interest on your year-end statement. Even if you don't receive a Form 1099-INT, you still need to report the interest. IRS computers match information from payers to tax filers and if your return doesn't match their information, they will let you know you not only owe the taxes on the unpaid interest but also penalties and interest.
Less Than $1,500
If your interest totals up to $1,500 or less, all you need to do is enter the amount on line 8a of Form 1040, Form 1040A or Form 1040EZ. This is the income section of your tax form. The interest you enter here is treated as regular income and taxed at your marginal tax rate. Find links to the tax form you want to use in Resources.
More Than $1,500
If your interest totals up to more than $1,500, you can't use Form 1040EZ to file your taxes. You must also fill out Schedule B Interest and Ordinary Dividends. The schedule has you list who paid you how much in interest. The final amount is then entered onto line 8a of Form 1040 or Form 1040A. Find a link to a Schedule B form in References.
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