Got Interest Income letter from Department of Treasury and 1099-INT (Rev.10-2013) - what do I need to do?

If I got something similar but for like $23, do I really need to bother amending? Seems like a ton of work for what would be a few bucks in taxes. Would the IRS even notice?

For $23, the tax impact would be even smaller - probably only a few dollars depending on your tax bracket. Technically, all income should be reported regardless of amount. Whether the IRS would notice is another question. They do have systems that match 1099 forms with tax returns, so they might send you a notice eventually. If they do, they would likely just ask you to pay the small amount of additional tax plus maybe some minimal interest. It wouldn't be considered a serious issue for such a small amount, but it's still better to handle it properly if you can.

Does this tool actually work for amending returns though? I'm in the same boat as OP where I already filed and then got this interest statement afterward.

Seems kinda sus that the IRS pays you interest but then taxes you on that interest. Classic government move! Does this tax tool handle state tax implications too? I know some states don't tax federal interest payments.

It absolutely works for amendments! That's actually exactly what I used it for. It showed me specifically which form to use and exactly which lines needed to be updated when amending. Saved me a ton of confusion. For state tax implications, yes it handles those too. You're right that some states don't tax federal interest payments. The tool actually flagged this for me and showed which states exempt this type of interest income. Turned out my state doesn't tax it, which saved me from reporting it incorrectly on my state return. It's really comprehensive for these weird tax situations that aren't obvious.

How does that even work? The IRS phone system is notorious for disconnecting people after hours of waiting. How can a third-party service possibly get you through faster?

Yeah right. No way this actually works. I've tried calling the IRS at least 5 different times this year and never got through. If this service actually worked, everyone would be using it. Sounds like a scam to me.

It basically uses an automated system to navigate the IRS phone tree and wait on hold for you. When it finally gets a human on the line, it calls you and connects you directly. I was skeptical too until I tried it. The reason it works is that they have the technology to dial continuously and navigate through all the prompts, something most people don't have time or patience for. It's not like they have some special connection to the IRS - they just handle the brutal waiting game for you. Kind of like how you might pay someone to wait in line for concert tickets.

Do you know if there's a fee for filing an amended return? I'm using FreeTaxUSA and wondering if they charge for amendments.

Most tax software charges extra for amendments, even if the original return was free. FreeTaxUSA specifically charges $14.99 for federal amendments as of 2023 filing season. Some people choose to file paper amendments instead to avoid the fee, but it takes much longer to process (sometimes 16+ weeks compared to 3-4 weeks for electronic amendments). If you're expecting a refund from the amendment, electronic is usually worth the fee just to get your money faster.

You should wait until your original return is fully processed before filing an amendment. Otherwise the systems can get confused and sometimes reject the amendment.

Technically, all income regardless of amount must be reported on your tax return - there's no minimum threshold for interest income specifically. However, from a practical standpoint, the IRS is unlikely to pursue very small amounts. I've heard from IRS agents informally that they generally don't pursue discrepancies under $10, but that's not an official policy you should rely on. If you want to be 100% compliant with tax law, you should report even small amounts like $5.