Intuit Academy Tax Practice Exam

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Does the $9 of interest income from Wells Fargo Bank need to be reported on Form 1040?

Yes, it is reportable and taxable
No, it is not reportable
Yes, but only if it exceeds $10
No, it can be ignored

The correct answer is: Yes, it is reportable and taxable

The correct answer indicates that the $9 of interest income from Wells Fargo Bank must be reported on Form 1040 because all interest income, regardless of the amount, is taxable and should be included on your tax return. The IRS requires taxpayers to report all income, and although the amount may seem minimal, it is still considered part of total income for the year. The rationale behind this requirement is that even small amounts of income can add up over time, and failure to report any income could lead to issues with tax compliance. Additionally, under tax regulations, there is no minimum threshold for reporting interest income; every dollar counts towards your tax liability. Rather than stating that certain amounts can be ignored, it's important to recognize that accurate record-keeping and reporting of income, including interest earned from financial institutions, is crucial for maintaining compliance and ensuring that the tax return reflects the true financial situation of the taxpayer.