If a taxpayer has three savings accounts, what must they do?

When a taxpayer has multiple savings accounts, they are required to report the interest earned from each account individually on Schedule B of their tax return. This requirement is in place to ensure accurate reporting of income from various sources, as the IRS needs to verify that taxpayers are reporting all interest income correctly. Even if the interest from each account is relatively small, all amounts must be included to provide a complete picture of the taxpayer's income.

Filing Schedule B allows the taxpayer to specify the payer (the financial institution in this case) for each account, which helps maintain transparency and compliance with tax regulations. This also ensures that if the total interest earned exceeds certain thresholds, the taxpayer is aware of their obligation to report it properly.

In contrast, combining account earnings or reporting only the total interest may not capture all necessary details. Ignoring accounts based on a low interest threshold, such as under $1,500, is not acceptable if the taxpayer is required to report each source of interest income. Overall, the correct approach is to individually list the interest amounts from all accounts on Schedule B.