What is interest income?
Interest income is income earned in the form of interest which accumulates on investments. A classic example of interest income is the interest paid to the holder of a certificate of deposit. Savings accounts, dividends, and shares in credit unions can also generate interest income. As a general rule, interest income is treated as taxable, and it must be reported on income tax filings to avoid legal penalties. When someone earns interest income, the financial institution is responsible for issuing a form stating this. In the United States, this form is the 1099-INT or 1099-DIV, and it will be issued in any case where someone has earned more than $10 US. If less than this amount was earned, it still needs to be reported. People can report interest income directly on their tax forms in some cases, while in the instance of larger payments, they will need to file what is known as a Schedule B. The government treats interest as taxable because they view it as income: the bank pays the inter
