Page 23 - Interest Income - Individuals
P. 23
Interest Income
Gift for opening Account.
Prepaid insurance premiums.
• If you receive noncash gifts or services for • Any increase in the value of prepaid
making deposits or for opening an account insurance premiums, advance
in a savings institution, you may have to premiums, or premium deposit funds is
report the value as interest.
• For deposits of less than $5,000, gifts or interest if it is applied to the payment of
premiums due on insurance policies or
services valued at more than $10 must be made available for you to withdraw.
reported as interest.
• For deposits of $5,000 or more, gifts or
services valued at more than $20 must be
reported as interest.
• The value is determined by the cost to the
financial institution.
Interest on insurance dividends. U.S. obligations.
• Interest on insurance dividends left • Interest on U.S. obligations
on deposit with an insurance issued by any agency or
company that can be withdrawn instrumentality of the United
annually is taxable to you in the year States, such as U.S. Treasury
it is credited to your account. bills, notes, and bonds, is
• However, if you can withdraw it only taxable for federal income tax
on the anniversary date of the policy purposes.
(or other specified date), the
interest is taxable in the year that
date occurs.
21
