Tax on interest from CD?

[a_lee0415]

I currently have a short-term CD account that earns very little interest.
I created this not so much to make money but because I was interested in investing and wanted to start out in a "small step"
Anyways, I didn't know about the whole tax thing on interest that I earn from CD.
If I literally make like $5 on interest, for example, how does this work? Do I still have to report this? I don't want to be somehow taxed more than the interest I've made. I know I said I'm not doing this to make money (for now anyways) but it'd still feel pretty stupid of me if I lost any money this way.

[kork13]

There actually is an amount below which banks/investment companies don't report interest earnings to the IRS, but I don't remember what it was. But if you self-report it as interest earned, it's entirely possible that in the end, it won't change your tax due at all -- you would only owe up to 15%-25% on it, and if it's a small amount like $5-$10, the tax tables would potentially keep you at the exact same amount due as if you didn't report it at all.

[minnie1928]

There actually is an amount below which banks/investment companies don't report interest earnings to the IRS, but I don't remember what it was. But if you self-report it as interest earned, it's entirely possible that in the end, it won't change your tax due at all -- you would only owe up to 15%-25% on it, and if it's a small amount like $5-$10, the tax tables would potentially keep you at the exact same amount due as if you didn't report it at all.

I believe the amount is $10 or higher they are required to report it. Less than $10 is up to the bank, some banks still report less than $10 to the IRS.

[jpg7n16]

Per IRS regulations, you are still required to claim any income, whether it's reported to you or not.

Just call your bank and ask how much interest you made. They'll be able to tell you.

The bank doesn't have to report interest under $10, but YOU do.

From: Publication 17 (2010), Your Federal Income Tax

Form 1099-INT. Interest income is generally reported to you on Form 1099-INT, or a similar statement, by banks, savings and loans, and other payers of interest. This form shows you the interest you received during the year. Keep this form for your records. You do not have to attach it to your tax return.

Report on your tax return the total interest income you receive for the tax year.

Interest not reported on Form 1099-INT. Even if you do not receive Form 1099-INT, you must still report all of your taxable interest income. For example, you may receive distributive shares of interest from partnerships or S corporations. This interest is reported to you on Schedule K-1 (Form 1065) or Schedule K-1 (Form 1120S).

[JoshuaHeckathorn]

You've got to report the interest income no matter how small it is. You may never receive a 1099-INT from your bank, but it's technically still your responsibility to report it to the IRS. Also, you won't lose money on the deal, but you're not going to make much at all either.

[kork13]

The bank doesn't have to report interest under $10, but YOU do.

Sorry, I realized I may not have been totally clear... As jpg and the others have said, you do need to report it as income -- I only meant to say that for a very small amount, doing so will likely have little to no impact on your taxes.