Internal Revenue Service United States Department of the Treasury
Module 3: Interest Income

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Bank building with dollar signs

Interest is the charge for the use of borrowed money.

In most cases you will earn interest if you let others use your money.

Your money earns interest when it is

  • deposited in accounts in banks, savings and loans, and credit unions.
  • used to buy certificates of deposit or bonds.
  • lent to another person or business.

Interest is considered unearned income because money, not a person, is working to earn the income.

 

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