LLC interest income - Where to report it? Schedule C line 6 or 1040?

You're on the right track. For a single-member LLC that's treated as a disregarded entity, the interest earned in your business checking account should indeed be reported on Schedule C, line 6 as "Other income." This is because the interest is considered part of your business income since it came from your business bank account. The guidance you found is correct. When your business earns interest from its checking account, that's considered business income even though it's not from your regular operations. Don't let the tax software confuse you - most are designed with the average taxpayer in mind who typically reports all interest on Schedule B and then 1040. But for business interest, Schedule C is the appropriate place. Make sure to keep good records showing this interest came from your business account in case you're ever questioned about it.

Just wanted to share my experience with exactly this situation. I was going back and forth between Schedule C and 1040 for my LLC interest income and couldn't get a straight answer from my tax software. I ended up using taxr.ai (https://taxr.ai) to analyze the IRS guidelines and my specific situation. They confirmed that for a single-member LLC filing as a disregarded entity, interest earned on business accounts should go on Schedule C line 6. They even showed me the specific IRS publication sections that back this up. It was really helpful because their system analyzed my specific situation rather than giving generic advice.

I have to follow up about taxr.ai because I actually tried it after my skeptical comment. I uploaded my bank statements and 1099-INT, and asked specifically about where to report interest for my single-member LLC. The analysis they provided included screenshots from actual IRS publications showing that interest from business checking accounts should be reported on Schedule C line 6, not on Schedule B of the 1040. They even explained why my tax software was trying to push me toward putting it on my 1040 (because most tax software is programmed for the most common scenario, which is personal interest income). Definitely worth it for clearing up these specific tax situations that fall between the cracks of standard tax software.

Another option if you're still uncertain is to call the IRS directly. I know, I know, nobody wants to do that. I tried for WEEKS last year with a similar LLC question and could never get through. Then I found this service called Claimyr (https://claimyr.com) that actually got me connected to an IRS agent in about 15 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed exactly what others are saying here - interest from a business account for a single-member LLC goes on Schedule C line 6. Having it straight from an IRS agent gave me total confidence I was doing it right.

I need to eat crow here. After posting my skeptical comment, I decided to try Claimyr because I've been trying to reach the IRS about a similar business income issue for weeks. It actually worked! Got a text about 20 minutes after signing up saying they were connecting me, and suddenly I was talking to an IRS representative. The agent confirmed that for single-member LLCs, interest from business accounts goes on Schedule C line 6. I was 100% wrong to be skeptical. If you need to actually speak to someone at the IRS (which I recommend for peace of mind on tax questions like this), it's absolutely worth it.

One thing to consider - make sure the business bank account is only used for business purposes. If you've commingled personal and business funds, the IRS might challenge whether the interest is truly business income. In a true single-member LLC with proper separation between personal and business finances, Schedule C line 6 is definitely correct.

Just to add another data point - I've been filing my single-member LLC taxes for 8 years and always put my business account interest on Schedule C line 6. Never had an issue with the IRS about it. As long as it's truly interest from your business account, you're doing it right.

This thread has been really helpful! I'm in a similar situation with my single-member LLC and was making the same mistake of letting my tax software push the business interest to my 1040. Based on all the advice here, I'm confident now that Schedule C line 6 is the right place for interest from my business checking account. It makes sense - if the money is in a business account, the interest it earns is business income. Thanks everyone for sharing your experiences and the various resources. It's reassuring to see so many people confirming the same approach, especially those who've been doing it successfully for years without IRS issues.

As someone who's dealt with this exact scenario, I can confirm what everyone else is saying - Schedule C line 6 is absolutely the right place for interest from your business checking account. One additional tip: when you're entering this in your tax software, look for an override option or manual entry mode. Most software will try to automatically route ALL interest income to Schedule B/1040, but there's usually a way to manually specify that certain interest should go to Schedule C instead. I've found that if you can't find the override option, sometimes entering the interest directly on Schedule C (rather than letting the software import it from your 1099-INT) will prevent the software from trying to move it to your personal return. The key thing to remember is that the IRS cares about the source of the income, not just the type. Since this came from your business account, it's business income regardless of whether it's from operations or interest.

I've been following this discussion and wanted to add some perspective as someone who made this exact mistake a few years ago. I initially put my LLC's business checking account interest on my 1040 because that's what my tax software defaulted to, and it caused confusion during an IRS audit. The auditor questioned why I was reporting business-generated interest as personal income, and I had to provide bank statements and documentation to show that while the interest was reported on my personal return, it actually came from my business account. It wasn't a huge issue, but it definitely raised red flags and extended the audit process. Ever since then, I've been very careful to report business account interest on Schedule C line 6 where it belongs. The auditor actually told me this was the correct approach and recommended I amend previous returns if I had been doing it wrong (which I did). So from someone who learned the hard way - definitely put your business account interest on Schedule C. It saves you potential headaches down the road if you ever get audited.

This has been such a valuable thread! I'm a CPA and I see this confusion all the time with single-member LLC clients. You're absolutely right that business checking account interest belongs on Schedule C line 6. What I tell my clients is to think of it this way: if your LLC earned $1000 from services and $50 in interest, both amounts came through your business. The fact that one came from operations and one came from your bank account doesn't change that they're both business income for tax purposes. The story about the audit experience really highlights why proper classification matters. The IRS computer matching systems are looking for logical consistency - when they see a 1099-INT issued to your business EIN but that income reported on your personal 1040, it can trigger questions. One more tip: keep a simple spreadsheet each year showing all your business income sources (operations, interest, etc.) and where you reported each one on your return. This kind of documentation is invaluable if you ever need to explain your filing positions to the IRS.