How do I report interest received on an installment sale?

If you receive interest on an installment sale, report the entire amount on line 8a of Form 1040 (PDF) or Form 1040A (PDF), or line 2 of Form 1040EZ (PDF). If your taxable interest income is more than $1,500, be sure to show that income on Schedule B of Form 1040, or on Schedule 1 of Form 1040A. You cannot file Form 1040EZ if your interest income is more than $1,500. Refer to Tax Topic 403, Interest Received, for additional information on interest income Form 1040, Schedule B (PDF). For additional information on installment sales, refer to Tax Topic 705, or Publication 537, Installment Sales.