Q from an ignorant taxpayer

[Catchawave]

Getting my stuff ready for filing taxes. Mostly interest paid on mortages #1 and #2(check,check), military retirement, social security income for my husband and mentally disabled son (check,check, check), 14k in dental bills,after pissant dental insurance coverage(check). Personal property taxes on two chevvys, and yeah, property taxes that are more than our mortgage payments now (check, check).

Now here's my problem. Interest income from a small savings account which amounts to $36.00. Obviously, I paid taxes on the money I put into this small savings account (bal/$2300 for 2006). But this $36.00 is on a cute little IRS form as being reported as income? I feel like I'm being pecked to death by a duck, where is the incentive for SAVING MONEY ?

Thanks for your help :toast:

[Sammy Pepys]

1. Don't quote me because I don't quite remember, but...

...you'll enter that interest elsewhere on your form (that is, not as earned income) and I don't think an amount that small will be considered taxable.

[northzax]

2. you have to report it

but it won't change your taxes owed. Yes, you pay tax on all income, including that which is from interest. (otherwise Bill Gates would pay no taxes, right?)

[Catchawave]

12. I wish they'd bring back the credit card interest deduction then...

..which at one time did bring the middle class closer to Bill Gates' problems :silly:

[Jacobin]

3. its interest income and reportable

[BeyondGeography]

4. Find a tax-free money-market fund

you can write checks against them like a regular bank account if you need the money plus their rates are better than what the banks offer once you factor in the tax savings. All the big mutual funds have them.

[Catchawave]

13. Used to have one of those

..in a different income era. My 2nd Mortgage is an equity line, at least I can deduct that interest, for using my own money...sigh.

[sharp_stick]

5. I know, this one sucks

I'm always amazed at the nickle and diming that goes on, it seems like there is no way to get ahead. I mean when they make you pay taxes on a lousy 36 bucks in interest income and jackoffs that owe millions get away with it I just feel so frustrated. The taxes that they are asking for is on the interest that you earned not the original deposit money.

You could just ignore it but the taxes are probably miniscule on $36 and it wouldn't be worth the trouble if it tipped the IRS onto an audit.

[Sammy Pepys]

7. I don't think $36 in interest carries any tax...

It may be taxable by virtue of how it is earned, but I think you need to earn something like $1500 in interest before you are actual liable for taxes on it.

[Catchawave]

11. Thanks Sammy, that's what I'm hoping....

But knowing our government, it probably *cost* 36.00 to send me that statement, which could have fed a child in a third world country for a month?

My luck, it's going to through me into the next income tax bracket :banghead:

[mrreowwr_kittty]

6. It is silly for that small an amount

But it's necessary to make everyone report interest income. You may have only made $36, but there are those who make $36K and the same reporting rules have to apply to all. Yours is not likely to affect your tax bill at all.

[Sammy Pepys]

8. $10 and up must be reported.....n/t

...

[geardaddy]

10. That's what I recall from years past.

Had less that $10 in bank interest, so I didn't get a 1099-Int from that bank.

[lectrobyte]

9. I can only say I had something like this one year from a savings

account for around $100, and I didn't think it would matter... I was wrong, and later became sorry that I was wrong. That's all I'm going to say, it's still a painful topic about the lectrobyte household.

[slackmaster]

14. I'm afraid you'll have to suck up and pay the tax on that $36 of interest

It sounds like your return is relatively simple, but have you considered going to a professional?

My tax guy, also a very good neighbor, charges me about $120. One year he saved me from about $3,500 in Alternative Minimum Tax by probing me for rarely-used but allowable and defensible deductions. In my case I wrote off a $1,500 uncollectable personal debt, money I had loaned (for legal purposes, all documented) to a man I was helping, who screwed up and got sent to prison for a long time.

You'd be surprised what a GOOD tax professional can do for you.

[Catchawave]

16. Yes, have a good friend who's been doing this for us

for years. Well, not that good, he charges us by the document :D So my 36.00 tab from the credit union will probably cost me another buck. No biggie, but I have to wonder if Cheney sweats this stuff...lol.

Hubby just left with the file, we know we have to pay again this year, I'll report back with the bottom line. I'm guessing we owe about 2-3 grand again this year.

[SoCalDem]

15. You will need to list it, but if total interest is under $400 ($800 couple)

you are not going to take a hit.. (at least that's the way it used to be, I think ).

Every organization that pays interest HAS to list it, no matter how much each payment is...because i think they get to deduct the aggregate, which could amount to brazillions if they sent out enough of those $36 checks :)