When tax time rolls around, it is important to make sure you are recording all income on your tax returns to avoid harsh IRS penalties. Savings accounts and the interest they generate are no different. There are not lot of guidelines when it comes to filing saving interest making the process as simple as anything tax-related can be.

Interest Amount

One of the main considerations is the amount of interest you have earned. You will need this information before you can start filing. If you have earned over $1500 in savings interest, you will need to file a Form 1040A. If you have earned less than this, you can file any one of the individual tax forms, including a 1040EZ. To determine the amount of savings interest you have earned, add the amounts from all 1099-INT you receive. The line item on the tax forms is line 8a to record the aggregate amount of interest earned from savings.

Additional Forms

Once you have determine what tax form you will use to file your taxes, you will need to determine if there are other forms and schedules that need to be completed. If you have earned more than $1500, you will also need to fill out a Schedule 1 or B. Part 1 of Schedule 1 is used when filing Form 1040A. You must also use Schedule 1 if you have received a 1099-INT on frozen deposits or received interest as a nominee, which means the interest actually belongs to someone else. When filing a Form 1040, Part I of Schedule B needs to be filed. This form must also be filed if you bought a bond between interest payment dates but still received the 1099-INT.

Professional Help

Filing your savings interest is a basic part of tax preparation. If you have concerns with doing this yourself, finding a competent tax preparer should not be difficult. You won't need a CPA to properly file this. In fact, many of the software programs you can purchase such as Turbo Tax or Tax ACT can walk you through the right information.

Source:

IRS: Forms

Tax In Depth: Instructions Interest Filing

Tax Software Reviews