Tomatops, please report everything. I certainly do. Besides the ethical consideration, the IRS can figure out that you have been receiving (and failing to report) side hustle income. Do you deposit it in your bank accounts? That's a red flag. Do you spend it in place of money that would have otherwise come out of your bank account on a regular basis? That's a red flag. Also, realize that our tax system is very complex. If you are audited, there is a good chance that the IRS will find some sort of error. Do you want them to find the error AND that you have been INTENTIONALLY understating income? They will be less forgiving if you did anything intentionally. Also, KNOWINGLY and INTENTIONALLY understating income is tax fraud, which means there is no statute of limitations. And, surprise, your obviously good financial knowledge through your ability to achieve FIRE will support the IRS argument that you knew better. The IRS is going to be a lot more understanding of someone who is scraping by waiting tables and thought their employer was putting all their tips on the W-2 than someone financially savvy who FIREd at a young age and is just padding their nest egg.
Ricksun, you are fine. The taxes on that would be $1, after rounding up. The statute of limitations has passed, it was very obviously not an intentional omission, and the amount is de minimis. At my previous firm, we didn't file amended returns for less than a $100 error (if I recall correctly), because it was not worth our client's time, our time, or the IRS time.
Yes, even the tiny exempted interest in my savings account.
This brings up a side question.
I am darned near religious about trying to understand and follow the letter of the law when it comes to taxes. I don't like taxes, but I am in no way willing to break the law -- or even bend it.
That said, if I read this: My limited understanding here is that interest payments under $10 don't have to be reported. I've got a couple of money market/savings accounts that pay almost nothing and I almost always get one or two that pay under $10. The financial institutions don't even send me a 1099. I only know the interest amounts from looking at my own records/statements.
Am I supposed to be reporting this? I know it probably doesn't matter. $8 of income is likely not to change my tax -- and if it does, not by much.
That page of instructions is for the banks and businesses who are paying interest. If a bank holds a bunch of accounts and pays interest on them, the bank is not required to send out 1099-INT forms for totals under $10. (Though some do anyway.) The bank's obligation to send out 1099s is not related to your obligation to report all income. That being said, the IRS understands that most people will not think to report savings account interest unless they get 1099s... Officially, however, you are supposed to report ALL income.
