U.S. tax nerd question -- is interest under 50 cents reportable?

[Jingthing]

Looking forward to my IRS filing for 2021 I can see one of my Thai bank accounts will have interest under 50 cents.

 

As I round up or down all figures as is typical for tax filings I have reported one dollar before for interest over 50 cents.

 

But I don't know what to do if its under 50 cents.

 

If I report one dollar, thats lying. If I report 0, that's taxable interest unreported.

 

No. Not rounding all numbers on my return is not an option.

 

A penny for your thoughts?

Edited November 9, 2021 by Jingthing

[Pib]

When you decide to round on a tax return you are to follow the IRS rounding rules.  Therefore, amounts below 50 cents would not be reported since they rounded to zero.  Zero mean nothing to report.  

 

And tax software will generally automatically round down to $0 when the amount is 1 to 49 cents.  While the tax software might show the name of the financial institution you entered on your computer screen the amount would be zero or blank and not printed on your tax return.  Or that's been my experience with tax software.

 

Summary: do not report amounts below 50 cents unless you want to hack the tax software and somehow force it to show that 1 to 49 pennies of interest earned.

[EVENKEEL]

US banks don't even send out yearly interest papers for less than $10.00. If it was me I wouldn't even give it a thought. For my Thai bank I would care even less. Don't go looking for trouble.

[bbko]

2 hours ago, Jingthing said:

A penny for your thoughts?

That penny will cause a lot of headaches; no work permit, foreign earned income, taxes, etc. ????  

[Jingthing]

1 hour ago, Pib said:

When you decide to round on a tax return you are to follow the IRS rounding rules.  Therefore, amounts below 50 cents would not be reported since they rounded to zero.  Zero mean nothing to report.  

 

And tax software will generally automatically round down to $0 when the amount is 1 to 49 cents.  While the tax software might show the name of the financial institution you entered on your computer screen the amount would be zero or blank and not printed on your tax return.  Or that's been my experience with tax software.

 

Summary: do not report amounts below 50 cents unless you want to hack the tax software and somehow force it to show that 1 to 49 pennies of interest earned.

Well that bank will show up in my tax software as I import previous filings but I can delete it. I do the rounding myself rather than ever entering any cents. It seems weird to me to list a bank to report 0.

Edited November 9, 2021 by Jingthing

[Jingthing]

1 hour ago, EVENKEEL said:

US banks don't even send out yearly interest papers for less than $10.00. If it was me I wouldn't even give it a thought. For my Thai bank I would care even less. Don't go looking for trouble.

Foreign banks share info with the IRS without 1099s. You're right the minimum to require a 1099 from a US bank is 10 dollars but filers are still supposed to report under that.

 

[LarrySR]

Live large and report $1.

[Jingthing]

5 hours ago, LarrySR said:

Live large and report $1.

I can picture it now.

Audited for rounding up when I should have rounded down.

Ridiculous of course but I do recall years ago the IRS giving me grief over a matter of a few dollars that wouldn't have changed my tax liability either way

[PoodThaiMaiDai]

16 minutes ago, Jingthing said:

I can picture it now.

Audited for rounding up when I should have rounded down.

Ridiculous of course but I do recall years ago the IRS giving me grief over a matter of a few dollars that wouldn't have changed my tax liability either way

I own a tax business.

 

You will not get "audited" for this and any error of $1 on taxable interest will not even create an automated letter which is what most people get, yet they think they are being audited.

 

Letters from the IRS are usually just inquiry letters or letters of changes, which allow you to agree or disagree or appeal.

 

Best course of action it to leave anything under .50 cents off of your return.

Edited November 10, 2021 by PoodThaiMaiDai

[Jingthing]

4 minutes ago, PoodThaiMaiDai said:

I own a tax business.

 

You will not get "audited" for this and an error of $1 on taxable interest will not even create an automated letter which is what most people get, yet they think they are being audited.

 

Letters from the IRS are usually just inquiry letters or letters of changes, which allow you to agree or disagree or appeal.

 

Best course of action it to leave anything under .50 cents off of your return.

Thanks but I was clearly joking about the audit worry and I never said I was literally audited before over a few dollars.

[PoodThaiMaiDai]

1 minute ago, Jingthing said:

Thanks but I was clearly joking about the audit worry and I never said I was literally audited before over a few dollars.

Oops, got it.

You would be surprised how many people are serious about that.