Form 1099-INT is a tax form issued by the Internal Revenue Service (IRS) to report interest income. Issued by entities that pay interest income to investors during the tax year, it encompasses a breakdown of all types of interest income and related expenses. Payers are required to issue a 1099-INT by January 31 for any entity to whom they paid at least $10 of interest during the previous year—one copy heads to the IRS and another to the taxpayer.
Key Takeaways
- Form 1099-INT is essential for reporting interest income to the IRS.
- Entities issuing Form 1099-INT include banks, brokerage firms, and financial institutions.
- Issuance of Form 1099-INT is mandatory for interest payments exceeding $10 during a year.
- Types of interest income reported include interest on deposit accounts, dividends, and amounts paid to holders of collateralized debt obligations.
- Forms must be distributed to recipients by January 31.
Who Can File Form 1099-INT?
Entities report certain amounts paid to taxpayers on Form 1099-INT, which include:
- Interest on bank deposits
- Accumulated dividends paid by a life insurance company
- Interest from registered debt securities like bonds and notes (excluding U.S. Treasury instruments)
- Amounts from which federal or foreign tax was withheld
Less common amounts reported include:
- Interest accrued by a Real Estate Mortgage Investment Conduit (REMIC)
- Payments to holders of Financial Asset Securitization Investment Trust (FASIT) or Collateralized Debt Obligations (CDO)
For Payers Utilizing Form 1099-INT
Interest income from banks, investment houses, mutual fund companies, and other financial institutions is reported on Form 1099-INT. This form must be filed in the following scenarios:
- Interest income of $10 or more
- When foreign taxes are withheld on interest payments
- When federal income tax is withheld without refunding under backup withholding regardless of the amount paid
Interest reported as taxable income must be included in the IRS annual tax return. Entities paying over $10 in interest must file a 1099-INT and report to both the IRS and recipients by January 31 each year.
For Recipients of Form 1099-INT
Taxpayers receiving Form 1099-INT need to report this interest income on their federal income tax return. Taxable interest is taxed at the same rate as ordinary income unless the interest income is deemed tax-exempt.
Most interest income is reported on Part 1 of Schedule B: Interest and Ordinary Dividends. Interest on U.S. Series EE and Series I bonds is excluded, and the net subtotal reported on Form 1040, Line 2b.
Interest income contributes to the taxpayer’s adjusted gross income (AGI) when aggregated with wages, salaries, and other income types.
How to File Form 1099-INT: Interest Income
Form 1099-INT relays information about the amount of interest paid or received. Only applicable sections should be filled out:
Payer’s Information
Details required include the payer’s name, address, ZIP, and taxpayer identification number (TIN).
Recipient’s Information
Include the recipient’s TIN, name, address, and ZIP code. Usually, this information is collected at the point of account setup.
Key Sections on Form 1099-INT
Box 1: Interest Income Reports taxable interest excluding Box 3 entries.
Box 2: Early Withdrawal Penalty Forfeited principal or interest due to early withdrawal from a time deposit.
Box 3: Interest on U.S. Savings Bonds and Treasury Obligations Reports interest on U.S. government-issued obligations.
Box 4: Federal Income Tax Withheld Reports taxes withheld due to missing taxpayer identification.
Box 8: Tax-Exempt Interest Captures tax-exempt interest earned primarily off state or governmental obligations.
Other sections may cover specific reporting needs, often best reviewed with a tax advisor.
Special Considerations When Filing Form 1099-INT
Exempt Recipients/Payments
Not all entities receiving interest payments require Form 1099-INT. Corporations, tax-exempt organizations, IRAs, and U.S. agencies are often exempt.
Interest arising from foreign sources or transactions may also be exempt under certain criteria.
Timing of Payments
Interest should be reported when paid or made available without restrictions. For more specific obligations like savings bonds, interest is recorded when the obligation is presented for payment.
Final Thoughts
Form 1099-INT ensures that interest income is properly reported to the IRS. Entities issuing or receiving interest payments need to comply with reporting requirements, while taxpayers must report these on their tax returns accordingly.
Remember, failing to include interest income on your tax return can trigger discrepancies with IRS records, leading to further scrutiny or audits.
Related Terms: 1099 Miscellaneous, Interest Payments, Taxable Income, IRS Tax Forms.
References
- Internal Revenue Service. “Instructions for Forms 1099-INT and 1099-OID (Revised January 2024)”.
- Internal Revenue Service. “2023 General Instructions for Certain Information Returns”, Page 16.
- Internal Revenue Service. “Schedule B (Form 1040)”.
- Internal Revenue Service. “Topic No. 403, Interest Received”.
- Internal Revenue Service. “About Form 1099-INT, Interest Income”.
- Internal Revenue Service. “Form 1099-INT (Rev. January 2024)”.
- Internal Revenue Service. “Topic No. 403 Interest Received”.
