When it comes to personal loans, there are a lot of options out there. So, how do you know which one is right for you? By knowing your credit score, loan amount, and interest rate, you can easily compare different personal loan offers and find the best one for you.
Report interest income from a personal loan.
You should report the interest income in the same manner as interest received from a bank, just as if you have received a form 1099-int. Fill out box 1 with the amount of interest earned and your name as the payer.
Report personal loan interest on taxes.
On the “taxable interest” line of your return, you must always record loan interest income that is subject to federal taxation. However, if your total interest income for the year—not just the interest on the loan—exceeds $1,500, you must declare it on a schedule b that you must include with your tax return.
Whether to report interest earned on a personal loan.
Any interest you receive from a personal loan must be reported and taxed. If you collect less than market rate interest on a loan greater than $10,000 you must still pay tax on the foregone interest and may owe gift tax.