Interest Income

Interest income is taxable income unless it is non-taxable income.. Depending on whether it’s taxable or non-taxable income is how it gets reported on the Form 1040. While both types of interest is reported on the Form 1040, taxable interest income gets added to a taxpayer’s taxable income while non-taxable income does get added to taxable income. U.S. Treasury Notes and Bonds and Municipal Bonds (Munis) are types of non-taxable interest income. However, Series EE U.S. Savings Bonds is taxable income along with bank interest (Checking, Savings, CDs, Money Markets, etc...) and corporate bond interest (OID, Bond Discount and Bond Premium Amortization, Accrued Bond Interest). Other types of interest income are seller finance installment sales and notes receivable. For seller finance through an installment sale, the seller should provide the buyer with an amortization schedule and get the buyer’s name and their social security number to report on Schedule B. Schedule B is the tax form used to report interest and dividend income to report total interest and dividend income over $1,500. The amount reported on Schedule B will flow onto Form 1040. Taxpayers who have total dividend and interest income under $1,500 will the interest and dividend income on Form 1040 without using the Schedule B.