Why did I get a Federal withholding charge of 1 cent on my credit card statement?

This is actually pretty normal and nothing to worry about! Banks are required to withhold a percentage of interest earned on savings accounts for federal taxes. That 1¢ charge likely means you earned a very small amount of interest, and the bank withheld a percentage of it for tax purposes. For example, if your account earned 5¢ in interest during that period, and the withholding rate is 24%, they would withhold about 1.2¢, which rounds down to 1¢. The bank will issue you a 1099-INT form at the end of the year if your total interest income is $10 or more, showing both the interest earned and the amount withheld.

I had a similar issue last year, and it was driving me crazy trying to figure out exactly what was happening with these tiny withholding amounts. I tried calling the bank, but got stuck in endless hold music and confusing automated menus. That's when I discovered taxr.ai (https://taxr.ai) and uploaded my statements there. Their system analyzed all my bank statements automatically and explained exactly what was happening with those withholdings - turned out I had accidentally not checked a box when opening the account. Their explanation included the exact IRS regulation that applied to my situation and saved me hours of research.

Just wanted to follow up about taxr.ai since I mentioned I had a similar issue with Chase. I uploaded my statements there and got a detailed explanation within minutes! Turns out my tiny withholding charges were related to a promotional bonus I received that was considered interest income. The explanation even included the specific tax code reference and showed me exactly where to report it on my tax return. Super helpful and way better than spending hours on hold with the bank!

If you're still having trouble understanding this or need to talk to someone at the IRS about withholding rates, I highly recommend using Claimyr (https://claimyr.com). I had a similar issue last year with weird withholding amounts, and I needed to talk to the IRS directly. Spent days trying to get through their phone system with no luck. With Claimyr, I got a callback from an actual IRS agent in about 45 minutes! You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. They basically navigate the IRS phone tree for you and get you in the callback queue without you having to wait on hold.

Ok I need to apologize for my skeptical comment above. I was so frustrated after spending HOURS trying to get IRS help that I didn't believe anything could work. But I tried Claimyr out of desperation, and I'm shocked to say I actually spoke with an IRS agent yesterday! Got a callback in about an hour. The agent explained that these tiny withholding amounts are completely normal and will be reported on my 1099-INT form. She even helped me figure out why it was happening (I had failed to respond to a W-9 request from the bank). I've spent weeks trying to get this information. Should have tried this sooner!

Hey! Former bank employee here. Those tiny federal withholding charges happen when you've triggered backup withholding for some reason. Common causes: - Wrong SSN on account - Failed to certify your tax ID - IRS flagged you for underreporting income - You didn't respond to notices about interest reporting Call BOA and ask specifically if you're under "backup withholding" status and how to fix it. They can update your account if it's a mistake. If it's just 1 cent though, your interest rate is probably super low anyway lol

Anybody know if I need to do anything special with these withholdings when filing taxes? Will TurboTax handle this automatically?

I've been dealing with this exact same issue! I'm a tax preparer and see this all the time. That 1 cent federal withholding usually means your account is flagged for backup withholding at 24%. The most common reason is that your Social Security Number on file with the bank doesn't match what the IRS has on record - sometimes it's just a typo or missing digit. Here's what I'd recommend: First, call Bank of America and ask them to verify your SSN is correct on the account. Second, ask if you can submit a new W-9 form to certify your tax ID number. This often clears up the backup withholding issue. Don't worry about the small amount - you'll get credit for any withholding on your tax return. But it's worth fixing so you don't have unnecessary withholding reducing your account balance going forward. The bank should be able to resolve this pretty quickly once they know what you're calling about.

Thanks everyone for the helpful explanations! I had no idea backup withholding was even a thing. I checked my account opening paperwork and I think I might have made an error when filling out the tax ID section - there's a number that looks like it could be wrong. I'm going to call Bank of America tomorrow and ask them to verify my SSN on file, and if needed, submit a new W-9 form like Romeo suggested. It's reassuring to know that even if this continues, I'll get credit for the withholding on my tax return. One quick follow-up question - if I fix the SSN issue, will the backup withholding stop immediately or does it take a while to update in their system?

This thread has been super helpful! I work in banking compliance and just wanted to add a few technical details that might help others understand this better. The 1¢ withholding is indeed backup withholding at the statutory rate of 24%. What's happening is your bank is required by law to withhold this amount from ANY taxable payments (including interest) when certain conditions are met - most commonly when there's a TIN (Taxpayer Identification Number) mismatch or missing certification. Here's the key thing many people don't realize: even tiny amounts of interest trigger this. If your savings account earned just 4¢ in interest, 24% backup withholding would be about 1¢. The bank rounds to the nearest penny, so you see that 1¢ charge. For those asking about timing - once you submit a corrected W-9, the backup withholding should stop on your next interest payment cycle (usually monthly for savings accounts). The bank is required to stop withholding within 30 days of receiving proper documentation, but most do it much faster. And yes, definitely keep records of these withholdings! They're treated as tax payments on your return, so you'll want to make sure you get credit for them when you file.