Confused about reporting withdrawal fees on my 1099-INT forms

The good news is you don't need to worry about reporting that withdrawal fee on your tax return. Withdrawal fees from regular savings accounts are essentially service charges that the bank imposes - they're not considered income or deductions for tax purposes. The early withdrawal penalties that do need to be reported are specifically for certificates of deposit (CDs) and certain time deposit accounts, and those would be shown on your 1099-INT in Box 2 as "Early withdrawal penalty." These penalties actually reduce your interest income. Regular savings account fees are just a cost of banking and aren't tax-relevant. So if it's not showing up on your 1099-INT, that's perfectly normal and you can ignore it for tax purposes.

I had this exact same question last year! I tried figuring it out myself and ended up down a rabbit hole until I found this tool called taxr.ai (https://taxr.ai) that saved me so much time. I uploaded my 1099-INT and it immediately explained that regular savings account withdrawal fees aren't reportable - they're just considered regular banking fees. What was super helpful is that it showed me what parts of my 1099-INT actually needed attention and which boxes were important for my tax situation. It even explained the difference between regular account fees and the reportable early withdrawal penalties that show up in Box 2.

I was skeptical about taxr.ai when I first saw it mentioned, but I decided to give it a try with my stack of tax forms that included several 1099-INTs from different banks. It actually saved me from making a mistake! One of my 1099-INTs had an early withdrawal penalty in Box 2 (from a CD I cashed out early), which I was confusing with a regular savings account fee. The tool immediately flagged that the Box 2 amount was deductible and showed me exactly where to report it. It even explained how this would reduce my taxable interest income. Super grateful I tried it - would have missed a legitimate deduction otherwise!

If you've tried calling the IRS to clarify questions like this, you know it's basically impossible to get through. After waiting on hold for 3+ hours last tax season, I found Claimyr (https://claimyr.com) and it was a game-changer. They have this system that gets you to the front of the IRS phone queue. I had a similar question about some fees on my accounts and wanted to confirm directly with the IRS. Used Claimyr, and they called me back when an IRS agent was on the line. The agent confirmed what others are saying here - regular bank fees aren't reportable, only those early withdrawal penalties that show up in Box 2 of your 1099-INT are relevant for taxes. You can see how it works here: https://youtu.be/_kiP6q8DX5c - saved me hours of hold music!

Ok I need to admit I was totally wrong about Claimyr. After posting that skeptical comment, I was still desperate to talk to someone at the IRS about some complicated 1099 questions including interest reporting, so I figured I'd try it and if it was a scam I'd just report back. It actually worked exactly as advertised. I got a call back about 45 minutes later with an IRS agent already on the line. The agent cleared up all my confusion about what fees needed to be reported (confirmed it's only those in Box 2 of 1099-INT forms). Honestly shocked that something actually worked as promised. Saved me from taking a day off work just to sit on hold.

Another way to look at this - anything that would be tax deductible or taxable should show up on your tax forms somewhere. Since your regular savings account fee isn't on the 1099-INT, it's not something the IRS is tracking for tax purposes. I wasted so much time my first year trying to account for every little banking fee and expense until my dad (who's been doing taxes forever) explained that only things that show up on official tax forms matter. Made my life way easier!

Small tip that helped me understand this better: think of bank fees like you think of any other service fee you pay - like a Netflix subscription or ATM charge. You don't report those on your taxes and the same goes for savings account withdrawal fees. The only "fees" that matter for taxes are those that are actually penalties for early withdrawals from tax-advantaged accounts or time deposits (CDs), and those will always be on your 1099-INT or other tax forms.

Thanks everyone for all the helpful responses! This makes so much more sense now. I was definitely overthinking it and trying to account for every little fee. Just to make sure I understand correctly - so the only thing I need to worry about from my 1099-INT is what's actually printed on the form itself, and regular banking fees like withdrawal charges, overdrafts, monthly maintenance fees, etc. are just personal expenses that don't affect my taxes at all? I feel so much better about filing now. First time doing taxes is pretty overwhelming but you've all been super helpful!