• U.S. taxpayers are required to report investment income.money 3 image by Fyerne from Fotolia.com
  
  United States Internal Revenue Service (IRS) regulations require taxpayers to report earnings from investments. Among the common types of investment income covered by IRS tax rules are ordinary taxable interest, such as monies earned from a common savings account, ordinary dividends such as a shareholder's profit from owning stock and capital gains earned from a mutual fund.
  
  

Proper Forms

• Reporting common types of investment income such as taxable interest, dividends and capital gains on amounts of less than $1,500 can be as simple as writing the amount into Form 1040 on the designated lines. U.S. federal individual income tax forms have the boxes clearly marked for each item considered income. Investment income earned in a calendar year totaling more than $1,500 from a single source generally requires filing an additional schedule. Filers should use Schedule B to report investment income from interest and ordinary dividends, and for capital gains, the IRS provides Schedule D. Both forms are addenda to U.S. Individual Income Tax Return forms 1040 and 1040A.
  
  

Taxable Interest

• The IRS stipulates in Publication 550 "Investment Income and Expenses" that investment income that should be reported as taxable interest includes monies gained from interest-bearing accounts at banks, credit unions and savings and loan associations. Financial institutions ordinarily provide account holders with a Form 1099-INT at the end of the tax year, specifying the amount of interest earned. However, the final responsibility of obtaining the information and reporting it to the IRS remains with the individual taxpayer.
  
  

Ordinary Dividends

• Dividends, a stockholder's share of company profits, may be paid out as cash in the form of a check or given to the stockholder in the form of more stock shares. In either case, the company generally provides the taxpayer with a Form 1099-DIV as the end of the tax year showing the amounts paid directly or reinvested. All amounts received as dividends must be reported to the IRS.
  
  

Capital Gains

• Income earned from investing as a shareholder in a mutual fund is generally reported to the IRS as capital gains. Mutual fund managers provide a Form 1099-DIV to shareholders showing the amount of capital gain distribution credited to the investor's account through direct payment or reinvestment. Whether the taxpayer chose to receive the capital gains as cash or to reinvest the gains back into the mutual fund is not pertinent to IRS reporting regulations.
  
  

EIC Filers

• Filers who complete the Earned Income Credit (EIC) worksheet must include investment income as part of the computations to determine eligibility. According to the tax laws in 2010, the maximum amount of investment income a filer can earn and still claim the EIC is $3,100.
  
  

Children

• IRS regulations permit a child to earn a specific amount of investment income without tax liability at the parent's rate. In 2010 the cutoff was $1,900.