If you receive interest on an installment sale, you can report it on Form 1040 (PDF) , Form 1040A (PDF), or Form 1040EZ (PDF). If your taxable interest income is more than $1,500, be sure to show that income on Form 1040, Schedule B (PDF) or on Form 1040A, Schedule 1 (PDF). 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. For additional information on installment sales, refer to Tax Topic 705, or Publication 537, Installment Sales.

References:

• Publication 537, Installment Sales
• Form 1040, Schedule B (PDF) Interest and Dividend Income
• Tax Topic 705, Installment Sales
• Form 1040 (PDF), U.S. Individual Income Tax Return
• Form 1040A (PDF), U.S. Individual Income Tax Return
• Form 1040EZ (PDF), U.S. Individual Income Tax Return for Single and Joint Filers with No Dependents
• Tax Topic 403,Interest Received

Source: www.irs.gov