Things You'll Need:
- Schedule B (Form 1040)
- Form 1099-INT
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Step 1
Gather the necessary information. You will need a form 1099-INT from the financial institution which issued the CD. If you don't have one, call the customer service department of your financial institution to request a copy. Even if you don't receive this form you are still responsible for reporting the amount of interest received as income. If the amount on the form is incorrect, ask for a new one which should be marked "Corrected." For an example of a 1099-INT form, see Resources.
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Step 2
Calculate the interest on your CD to verify the 1099-INT using a calculator. Bankrate has a CD calculator that is available for this. You will need to know the amount of your initial investment, the dollar value invested in the CD, the maturity duration, and the annual percentage yield (APY). See Resources for a link to the calculator. If you prefer to verify the calculation by hand, see step 3.
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Step 3
Calculate the interest on your CD by hand. Take the interest rate (let's use 6 percent as an example). Divide the interest rate by the duration of the CD. For a CD that matures in 1 year, the calculation would be 0.06/365 (0.000164384). This is your daily interest. Take the daily interest amount and add 1. Raise this number to the 365th power (1.061831311). Multiply this number by the dollar value of the CD. This number represents the amount of interest earned over 1 year. A $1,000 CD with a maturity of 1 year would be worth $1,061.83 at 6 percent interest.
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Step 4
Download the 1040 Schedule A&B from the IRS website. See Resources for link. Take the amount of Interest Income in Box 1 of the 1099-INT. Input this amount into line 1 of Schedule B, Part 1. You will also need to list the name of the issuing financial institution as the Payor.
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Step 5
If you have more than one CD from multiple Payors, list them all in Part 1. Add all lines in Part 1 for "line 2." This is the total amount of interest paid which should include all interest paid to you from CDs. You do not need to attach Form 1099-INT to Schedule B. The Payor has submitted the form to the IRS.
