Interest income under $1 - should I report it when it rounds to $0?

While it might seem silly to report such a small amount, technically all interest income is reportable regardless of the amount. The IRS requires you to report all interest income, even if it's just a few cents. That said, the reality is that if your bank hasn't issued you a 1099-INT (which they're only required to do for interest of $10 or more), the IRS likely has no record of this income. The tax software rounding to zero is just a display issue - the actual calculation should still include the cents. If you're filing electronically, I'd recommend entering the actual amount in the software. The software will handle the rounding properly for IRS purposes. Better to be on the safe side!

I had the exact same situation last year with my emergency fund account that paid like 0.25% interest. I literally earned 42 cents for the whole year! I was stressing about this too until I found taxr.ai (https://taxr.ai). They have this document analysis feature that helped clarify this exact situation for me. I uploaded my pathetic little bank statement showing the interest and their system immediately identified it as interest income and explained the reporting requirements. They confirmed that yes, technically all interest is taxable income, but also explained how the IRS systems handle rounding. Saved me from a ton of anxiety over pocket change!

Wanted to follow up after trying taxr.ai with my own bank statements. I was right to be skeptical but for the wrong reasons! Uploaded my December statement that showed YTD interest of 27 cents, and it immediately flagged it and explained that while all interest is technically taxable, when amounts round to zero on tax forms it's effectively irrelevant to my tax liability. What really impressed me was that it explained WHY the IRS requires reporting of all interest (something about establishing a consistent pattern for larger amounts) while showing me exactly where on my 1040 this would appear and how rounding works. Much more thorough than what I got from googling or asking my tax-savvy friends.

I've been in a similar situation and wasted HOURS trying to get someone at the IRS to confirm whether I needed to report tiny interest amounts. Called the general helpline 5 times and either got disconnected or was on hold for 40+ minutes before giving up. Finally discovered Claimyr (https://claimyr.com) which got me connected to an IRS agent in about 15 minutes! You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The agent confirmed that while technically all interest is reportable income, amounts that round to zero on the form won't affect your tax liability and the IRS systems handle the rounding automatically. Honestly, being able to just ask the IRS directly and get an official answer was worth it for the peace of mind alone.

Ok I have to eat my words here. After my skeptical comment I decided to test Claimyr just to prove it wouldn't work. Signed up yesterday afternoon expecting nothing, and got a call back in about 20 minutes connecting me to an actual IRS agent! I asked about this exact issue with tiny interest amounts. The agent said: "All interest income is technically taxable and should be reported regardless of amount, but amounts that round to zero cents on the form won't impact your tax calculation. Our systems handle rounding according to standard rules." He also mentioned that they're not going to come after anyone for a few cents of unreported interest, but officially we should report everything. Can't believe I finally got a straight answer!

I'm an accountant (not giving official advice here) but in practicality, interest under 50 cents that rounds to zero on a tax form isn't going to matter. The IRS systems round to whole dollars anyway. As long as you're honest with everything else, no one is getting audited over pennies of interest. My general advice for my clients is: if you received a 1099-INT, definitely report it. If you didn't receive a form and the amount is tiny, use your best judgment, but technically all interest is reportable income.

Fun fact: the IRS actually has a policy about rounding on tax returns! All amounts are rounded to the nearest dollar - 50 cents or more gets rounded up, under 50 cents gets rounded down. So your 38 cents would indeed round to $0 on the official forms. That said, I always report everything just to be safe. My parents got audited once over something super minor and it was a nightmare for them. Not worth the risk over reporting a few extra cents!

As someone who's dealt with this exact situation, I'd say report it to be completely above board. Even though 38 cents rounds to zero, the IRS technically expects all interest income to be reported regardless of amount. The key thing to remember is that this isn't really about the tax liability (since it rounds to $0 anyway) but about being compliant with reporting requirements. Most tax software will let you enter the actual cents amount, and it'll handle the rounding properly on the forms. I know it feels silly to report such a tiny amount, but it's better to be thorough than to worry about it later. Plus, if you ever get audited for other reasons, having complete records shows you're being honest about everything, even the small stuff.