Re: High Yield Savings accounts revisited
You are responsible for reporting it as income on your tax return.
BTW, the IRS <u>can</u> ask the financial institution to withhold 28% as "backup withholding" if they find that you failed to report it in the past. Just like withholding from your paycheck, that does not represent your ultimate tax liability.
Bottom line: you report it as interest income and it impacts your overall tax liability.
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