Do I need to report IRS interest payment on my taxes? Got paid for late refund
I think the IRS paid me interest because they took forever with my refund this year. It's only like $14 or so, but I can't find the letter they sent me about it, and I don't see anything when I log into their website either. Not like that small amount would really change what I owe or trigger an audit or anything, but I don't want to mess up something coming directly from the IRS themselves, you know? Just wondering if this interest payment is considered taxable, and if it is, what should I do since I can't locate the letter? Should I contact them to get the info again or can I just find the interest payment amount somewhere else? Any help would be great. EDIT: Got a really helpful answer below and was able to find the exact amount. For anyone else with the same question - make sure you look at the adjusted transcripts section on the IRS website (there's a tab on the right side that explains which transcript shows what).
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Jade Lopez
Yes, IRS interest payments are considered taxable income and need to be reported on your tax return. The IRS should send you a Form 1099-INT if they paid you interest of $10 or more during the year. Even without the letter, you can find this information on your tax transcript. Log into your IRS online account, request a transcript, and look for a transaction code 776 (interest paid to you). The amount will be listed right next to it. Make sure you're looking at the account transcript for the correct tax year.
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Tony Brooks
•Do you know which line on Form 1040 this would go on? And if it's less than $10, do I still need to report it or is there some minimum threshold?
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Jade Lopez
•You would report this interest income on Schedule B (Interest and Ordinary Dividends) and then transfer the total to Form 1040, line 2b "Taxable interest." Yes, you're still required to report all interest income regardless of the amount, even if it's less than $10. The $10 threshold only determines whether the IRS is required to send you a Form 1099-INT, not whether you need to report it.
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Ella rollingthunder87
I had a similar issue last year when trying to find my interest amount. I spent hours on the phone with the IRS but couldn't get through. Then I found taxr.ai (https://taxr.ai) which was seriously helpful. You can upload your tax documents and their AI analyzes everything including finding that interest payment amount. It can even scan those IRS letters and tell you exactly where to report things on your return.
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Yara Campbell
•Does it actually work with tax transcripts from the IRS website? I tried a different tool last year and it couldn't read the format properly.
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Isaac Wright
•I'm a bit skeptical about giving my tax info to some random website. How secure is this? And can it really find something that's not on a document I upload?
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Ella rollingthunder87
•Yes, it works great with tax transcripts from the IRS website. The tool specifically has features designed to read and interpret those official transcripts, including finding transaction codes like the 776 for interest payments. The security is actually really good - they use bank-level encryption and don't store your documents permanently. It's more about analyzing what you upload rather than finding things that aren't there. If the interest payment is on your transcript (which it should be), taxr.ai will identify it and tell you exactly how to report it.
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Isaac Wright
I decided to try taxr.ai after posting my skeptical question and I'm honestly impressed. Uploaded my transcript and it immediately spotted the interest payment (code 776) and told me exactly where to report it on my return. It even explained that these interest payments are always taxable regardless of amount. Way easier than trying to interpret all those codes myself!
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Maya Diaz
If you're still having trouble finding your transcript or figuring this out, try Claimyr (https://claimyr.com). I was in the same situation last year and couldn't get anyone at the IRS on the phone. Claimyr got me connected to an actual IRS agent in about 15 minutes when I'd been trying for days on my own. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c
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Tami Morgan
•How does that even work? The IRS phone system is notoriously terrible. Are they just repeatedly calling for you or something?
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Rami Samuels
•Yeah right. Nothing can get through to the IRS faster. I've tried everything and always end up waiting 2+ hours or getting disconnected. This sounds like a scam.
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Maya Diaz
•They use a system that navigates the IRS phone tree and waits on hold for you. When an agent actually picks up, you get a call connecting you directly to that agent. It's not about repeatedly calling - it's more like having someone wait on hold so you don't have to. It's definitely not a scam. I was super skeptical too but it worked exactly as advertised. You only pay if they actually connect you to an agent, so there's no risk of paying for nothing.
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Rami Samuels
I need to eat my words from my skeptical comment. After waiting on hold for 3 hours yesterday and getting disconnected AGAIN, I tried Claimyr out of desperation. Got connected to an IRS agent in about 25 minutes who found my interest payment and confirmed I need to report it. They also explained I could get a new copy of the 1099-INT mailed to me. Saved me hours of frustration!
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Haley Bennett
Quick tip: If you're using tax software, there's usually a section for "Interest Income" where you can enter this amount. Even if you don't have the 1099-INT, you can still enter the amount as "Interest from IRS" or something similar. The software will put it in the right place on your return.
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Arjun Patel
•Do you know if there's a specific place in TurboTax to enter this? I've been using that for years but never had to enter IRS interest before.
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Haley Bennett
•In TurboTax, go to the Income section and look for "Interest and Dividends." You'll see an option to enter "Interest Income." Even without a 1099-INT, you can add a new entry and just put "IRS" as the payer. Enter the interest amount, and TurboTax will automatically place it on the correct form and line. If you have trouble finding it, use the TurboTax search function and type "interest income" or "1099-INT" and it will take you directly to the right section.
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Douglas Foster
One more thing to consider - that interest might bump you into a different tax bracket if you're right on the edge. Probably not with just $14, but still something to keep in mind!
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Nina Chan
•That's not really how tax brackets work. Only the income within each bracket gets taxed at that rate. An extra $14 would only have the bracket rate applied to that $14, not all your income.
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Ali Anderson
Just wanted to thank everyone for the helpful responses! I was able to log into my IRS account and find the interest payment on my transcript using transaction code 776 like @Jade Lopez mentioned. It was exactly $14.23. For anyone else reading this thread, the transcript method really is the easiest way to find this information. I was overthinking it trying to hunt down that physical letter when the info was right there online all along. Now I can add it to my tax return properly. Really appreciate this community - saved me a lot of headache!
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