Savings Acct Interest IncomeTax Please Confirm?

Question

Hi

I have a form 1099-INT sent by my bank - I went to Liberty Tax Services to do my taxes - however the tax preparer sounded fishy to me. He said that I don't need to file the Form 1099-INT because the interest income is less than $1,500 ???

I thought that why would the bank sent me the form if I don't need to file it :/

Please help - should I file taxes with this guy

and Please clear things up for me??? what is the threshold for interest income so that I don't have to pay taxes

PS: Thank you for your answers :)

I'm single and 21 years old
I'm thinking of putting my mother as a dependent (she didn't work) - and no one claim her as a dependent

I brought all the forms to the tax preparer - my W2 and my 1099-INT

my wage was 28,000

Answer 1

If that tax preparer told you that, grab your paperwork and leave there IMMEDIATELY. He or she is a MORON and should go back to their day job flipping burgers at Mickey-D's. Don't even think of letting this IDIOT touch your tax return. He is dangerously mis-informed.

(Unearned income over $850 requires a tax return to be filed if it's your only income, in reponse to a few folks who alluded that it wouldn't be taxable if it was your only income.)

Interest from bank deposits is fully taxable as ordinary income. There is NO tax-free amount; every dollar is fully taxable. Whether you receive a Form 1099-INT or not, you must claim the income on your tax return.

You do NOT file the Form 1099-INT with your tax return unless it lists income taxes withheld from the interest paid to you.

Answer 2

If something seemed fishy with the tax preparer, go to someone else that you can have confidence in.

If the bank sent you a 1099-INT, the interest income is entered into your tax return.

Since you have taxable income from wages, all of your interest income is taxable. If you had less income, you would not owe taxes on the first $8,450 of income if you filed single and claimed yourself as an exemption.

Lastly, if you supported your mother, and your mother had taxable income of less than $3,300, then you can claim your mother as a dependent. In addition, if you paid for over half the costs of maintaining her home, even if she did not live with you, then you could file as head of household with your dependent mother as the qualifying person.

Answer 3

The tax preparer just did not give you a complete explanation.

If this was your only income for the year, yes, he is partially right that you do not have to pay tax. Why? Because your standard deduction and personal exemption that everyone is entitled to wipes out your reported income.

Since you did not provide to us is whether you are single, married, divorced, head of household or a widower, providing to you the values of your standard deductions and exemptions would be voluminous. Go to irs.gov and look up standard deductions and personal exemptions - you will find the proper amounts there.

The bank sends you the form because you earned the money reported on 1099-INT.
Your bank does not know all of your personal information to make a decision to not
send you or send you the 1099-INT. They are only required under law to furnish you
your monthly statements and an annual 1099. What you do with it is your own personal business.

There is a theshold for not paying taxes - but it varies depending on your marital status,
whether you support a child or whether you are a widower.

Should you file with this guy - Why not?

If you want a better explanation, go to a CPA. It will just be a little more costly.

Answer 4

You have to claim any amount of interest income paid to you. If you earned more than $10, your bank is required to send you a 1099 form showing the amount of interest paid to you. This is called "unearned" income and gets included on your 1040.
If you e-filed, then you do not include the 1099. If you paperfile, you are supposed to send it to the IRS, but it is kinda pointless.
You see, the bank automatically reports this interest amount to the IRS, so the IRS already knows how much interest you earned from this bank.
If you earn enough interest income, and I think the threshold is $1,500 per year, then you must file an additional schedule to your 1040 that itemizies the interest you earned from each bank. So, I think this is where the $1,500 threshold is confusing you.

Answer 5

Yes, you should declare the Interest income in your returns. The bank has already notified the IRS regarding the Interest.
If you use a software to do your returns it will figure out that your interest income is less than 1500 and it will not tax you but you still have to declare it.
There are several online tax filing tools available. Use them its easy rather than depening on someone we don't trust.

Answer 6

If you earn less than $10 from one bank, savings and loan, etc., they will not even send you a 1099.

If you get a 1099 from someone, it goes on the tax return, period.

Find someone else to do your taxes.