Page 87 - Interest Income - Individuals Handbook

When to report interest income

Constructive Receipt

 You constructively receive income when it is credited to your account or
made available to you.
 You don't need to have physical possession of it.
 For example, you are considered to receive interest, dividends, or other
earnings on any deposit or account in a bank, savings and loan, or
similar financial institution, or interest on life insurance policy dividends
left to accumulate, when they are credited to your account and subject
to your withdrawal.
 This is true even if they aren't yet entered in your passbook.

Constructive Receipt

 You constructively receive income on the deposit or account even if you
must:
• Make withdrawals in multiples of even amounts;
• Give a notice to withdraw before making the withdrawal;
• Withdraw all or part of the account to withdraw the earnings; or
• Pay a penalty on early withdrawals, unless the interest you are to
receive on an early withdrawal or redemption is substantially less
than the interest payable at maturity

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