interest paid from bank

[scooter]

My husband has 4 IRAs in 1 bank.  Each one has different amounts of interest paid in 2020.  The bank told my husband that if the amount paid was less than $10, you do not have to report it.  The total for all 4 is around $40, but 2 of them have amounts less than $10 ($6 and $7).  I thought you reported the TOTAL interest paid on your taxes as earned income.  Who is correct?  Me or the bank?

[TheOtherMe]

The bank should have said the bank doesn't have to report it.  Total interest is to be reported on your tax return.  

Is the interest within the IRAs?  Or did you actually receive the interest?

[ArchietheDragon]

Neither of you is right. ; )

You don't report interest income from an ira on your tax return.

But if it is interest that is not in an ira you have to report all income on your tax return. But the bank only has to report it to you if it is over $10.

[phil5185]

IRA earnings are deferred until you sell the IRA - annual interest is not reported.

(Why 4 IRAs, why not put the money in one IRA?)

[minnesotapaintlady]

Neither one of you is correct.  You don't ever report interest paid on IRAs.  That's the point of locking money in an IRA to begin with...to have money grow tax-deferred until you withdraw it.  

Bigger problem I see is having 4 IRAs in a bank paying nothing.  I would move them to Vanguard or Fidelity and invest that money. 

[schildi]

Interest under $10 from a Bank has to be reported on your return, even if the bank doesn't issue a 1099?

[Rukh O'Rorke]

Mar 7, 2021 12:37:58 GMT -5 schildi said:

Interest under $10 from a Bank has to be reported on your return, even if the bank doesn't issue a 1099?

yep - I'm in trouble! I think it is usually less than 40 cents on my checking account, hopefully I can get a pass.

[susana1954]

Mar 7, 2021 12:45:33 GMT -5 Rukh O'Rorke said:

Mar 7, 2021 12:37:58 GMT -5 schildi said:

Interest under $10 from a Bank has to be reported on your return, even if the bank doesn't issue a 1099?

yep - I'm in trouble! I think it is usually less than 40 cents on my checking account, hopefully I can get a pass.

You do know that I can turn you and schildi in for tax evasion and receive a reward?  I think it is a percentage of what you forgot to report.

[tallguy]

If it is less than forty cents you round it down to zero.  I think you're safe on that one!   

[tallguy]

Mar 7, 2021 9:18:47 GMT -5 phil5185 said:

IRA earnings are deferred until you sell the IRA - annual interest is not reported.

(Why 4 IRAs, why not put the money in one IRA?)

Your advice is not so valuable and your comments not so worthy that they merit being written twice as big as everyone else's....    

[scooter]

Dang, I just typed responses and it was deleted.

[Rukh O'Rorke]

Mar 7, 2021 13:26:24 GMT -5 susana1954 said:

Mar 7, 2021 12:45:33 GMT -5 Rukh O'Rorke said:

yep - I'm in trouble! I think it is usually less than 40 cents on my checking account, hopefully I can get a pass.

You do know that I can turn you and schildi in for tax evasion and receive a reward?  I think it is a percentage of what you forgot to report.

can I mail you a dime and we call it good?

[ken a.k.a OMK]

I'm almost finished my taxact filing and forgot to add the $0.80 interest from savings. 

[tallguy]

I included my $3.  Took a while to realize why it wasn't on my statement though.   

[schildi]

I actually got a 1099 from one bank that reported interest earnings of $0.06.
Not kidding. That bank sends me a 1099 every year, no matter what the amount is.
What a waste of paper and postage. 😄

[schildi]

Mar 7, 2021 13:26:24 GMT -5 susana1954 said:

Mar 7, 2021 12:45:33 GMT -5 Rukh O'Rorke said:

yep - I'm in trouble! I think it is usually less than 40 cents on my checking account, hopefully I can get a pass.

You do know that I can turn you and schildi in for tax evasion and receive a reward?  I think it is a percentage of what you forgot to report.

I never said I didn't report under $10 interest. I just didn't know that it's a requirement. 🙂👍🏻

[TheOtherMe]

Section 61 of the Internal Revenue Code (IRC 61, 26 U.S.C. § 61) defines "gross income," the starting point for determining which items of income are taxable for federal income tax purposes in the United States. Section 61 states that "[e]xcept as otherwise provided in this subtitle, gross income means all income from whatever source derived [ . . . ]"

So unless specifically excluded all income is required to be reported on your tax return, even if no documentation is issued.

Question always asked as a preparer and an auditor:  Did you have any other income than what you have told me about such as interest, jury duty, etc.  

[susana1954]

I did report $1.14 in interest this  year.  As a taxpayer, I'd hate for the government to waste postage trying to collect.  That's my money, too.

[scooter]

Where do my posts keep going?  LOL!!

[scooter]

Money is in the IRAs. Bought at separate times. Called the bank to ask where the form was. She said "we will mail another one out but here is the Information now." We will not cash them out to reinvest. We will cash them out maybe next year and take a trip.



I responded individually but I don't know where the responses went.

[TheOtherMe]

Since the interest was paid within the IRAs, it isn't reported on your tax return.

[Gardening Grandma]

Mar 7, 2021 9:18:47 GMT -5 phil5185 said:

IRA earnings are deferred until you sell the IRA - annual interest is not reported.

(Why 4 IRAs, why not put the money in one IRA?)

I have multiple IRAs.  Ever hear of a CD ladder? 

[schildi]

Mar 8, 2021 10:02:08 GMT -5 Gardening Grandma said:

Mar 7, 2021 9:18:47 GMT -5 phil5185 said:

IRA earnings are deferred until you sell the IRA - annual interest is not reported.

(Why 4 IRAs, why not put the money in one IRA?)

I have multiple IRAs.  Ever hear of a CD ladder? 

You need separate actual IRA accounts to have a few different investments / CDs or whatever you chose to put the money in?

That's different, I can have multiple investments of any kind in one IRA account.

[Gardening Grandma]

Mar 8, 2021 10:09:37 GMT -5 schildi said:

Mar 8, 2021 10:02:08 GMT -5 Gardening Grandma said:

I have multiple CD's.  Ever hear of a CD ladder? 

You need separate actual IRA accounts to have a few different investments / CDs or whatever you chose to put the money in?

That's different, I can have multiple investments of any kind in one IRA account.

I have four CDs with different maturity dates.  All four CDs are in my IRA account.  With varying maturity dates, one CD matures every year.  If I don't need the funds, I just reinvest it in another CD.  If I do need the funds I don't have to break one big CD and pay a penalty.  

(Fixed the typo - I don't have multiple IRAs at one bank, I have multiple CD's under one IRA; I'm guessing the OP means multiple CD's, not multiple IRA accounts)

[schildi]

Mar 8, 2021 10:22:19 GMT -5 Gardening Grandma said:

Mar 8, 2021 10:09:37 GMT -5 schildi said:

You need separate actual IRA accounts to have a few different investments / CDs or whatever you chose to put the money in?

That's different, I can have multiple investments of any kind in one IRA account.

I have four CDs with different maturity dates.  All four CDs are in my IRA account.  With varying maturity dates, one CD matures every year.  If I don't need the funds, I just reinvest it in another CD.  If I do need the funds I don't have to break one big CD and pay a penalty.  

(Fixed the typo - I don't have multiple IRAs at one bank, I have multiple CD's under one IRA; I'm guessing the OP means multiple CD's, not multiple IRA accounts)

My understanding was "multiple IRA accounts", but I could be wrong.

Did a post by tskeeter just disappear? I agreed with what was pointed out. While I don't always agree with Phil, I think his contributions are welcome and valuable. No need to get irritated by his font choice.