can you still get paid a small amount or interest, tax free?

Question

it used to be that a bank would only report your interest to the IRS if it was over $10 per year. I am not sure if that is per depositor or per account.

Is this still the case or do they now report all interest earned?

thanks

Answer 1

That is still the case, where the banks are only required to issue you a 1099 if they paid you more than $10 in interest a year. You need to note though, that even though they didn't report the interest paid to you on a 1099, that doesn't mean that the interest is not considered taxable income to you.

With some banks (i.e. Bank of America since I have several accounts with them), it is easier for them administratively to issue 1099's to everyone they paid interest to during the year than it would be for them to track and issue 1099's to just those that earned more than $10 in the year, so they will issue 1099's to everyone.

Answer 2

It is per account, not per depositor. For example my wife and I are both on one account and both deposit money into our joint savings from seperate checking, so at the end of the year it is taxed at $10 not $20. But you are right, you must report interest earned on anything over $10 regarding any interest earned.

Answer 3

Whether or not it's reported, it's ALL taxable. Banks are not requried to send 1099-INTs for payments of less than $10.00 but that does NOT mean that the interest is tax-free. There has never been any tax-free interest on bank account interest earned.

Answer 4

That's still the case, $10 limit. Legally, you are still required to report it on your return though if you file one, even if it's below the $10 limit so doesn't get reported by the bank to the IRS.

Answer 5

Yes, that is still the case. I believe it is per depositor.

In-state municipal bonds are tax free to federal and state.