Key Takeaways
- Reports interest income of $10 or more.
- Filed by banks, brokerages, and financial institutions.
- Recipients use it to report taxable interest.
- Includes interest on savings bonds and tax-exempt interest.
What is Form 1099-INT?
Form 1099-INT is an IRS information return used to report interest income of $10 or more paid to individuals or entities during the tax year. Financial institutions, banks, and brokerages file this form to report interest earnings from savings accounts, CDs, bonds, and other investments.
You use the information on Form 1099-INT to accurately report your taxable interest income on your federal tax return, ensuring compliance with IRS rules on interest reporting.
Key Characteristics
Form 1099-INT includes several important features that help both payers and recipients track interest income and related tax details:
- Interest Threshold: Issued when interest income equals or exceeds $10 in a tax year.
- Multiple Boxes: Reports taxable interest, tax-exempt interest, early withdrawal penalties, and federal income tax withheld.
- Backup Withholding: Reflects federal income tax withheld under backup withholding rules.
- Filing Deadline: Payers must furnish the form to recipients by January 31 of the following calendar year.
- Security Measures: Recipient’s Taxpayer Identification Number (TIN) may be truncated for privacy.
How It Works
Financial institutions and entities like banks or brokerages prepare Form 1099-INT to report interest paid to you, the recipient. They submit copies to both the IRS and to you so that the interest income can be reported accurately on your tax return.
You report the interest income shown on the form as ordinary income on your Form 1040. If your interest income exceeds $1,500, you may need to complete Schedule B. Forms can arrive from different sources if you earn interest from multiple payers.
Examples and Use Cases
Form 1099-INT applies to a variety of interest income scenarios, including:
- Bond Investments: Interest earned from bond funds such as BND may generate a Form 1099-INT reporting taxable interest.
- Savings Accounts and CDs: Banks provide Form 1099-INT for interest on savings accounts or early withdrawal penalties on CDs.
- Brokerage Accounts: Brokerages report interest income earned from corporate bonds or other debt instruments held in your account.
- Tax-Exempt Interest: Interest from municipal bonds reported on Form 1099-INT is tax-exempt but must still be reported, as noted in Box 8.
Important Considerations
When handling Form 1099-INT, be mindful of the tax implications of various types of interest income, including tax-exempt interest and penalties for early withdrawal. Properly reporting this income helps avoid IRS notices related to underreported interest.
Understanding how bond ETFs generate interest can clarify your tax documents, especially if you hold funds that distribute interest income. If you are a daytrader or active investor, knowing the distinction between interest and dividends is critical for accurate tax reporting.
Final Words
Form 1099-INT reports your interest income if it exceeds $10 from a single payer, and you must include this information on your tax return. Review all received forms carefully and consult a tax professional if you have multiple sources or complex interest income to ensure accurate reporting.
Frequently Asked Questions
Form 1099-INT is an IRS form used to report interest income of $10 or more paid to individuals or entities during the tax year. It is typically filed by banks, brokerages, and other financial institutions to report interest earned on savings accounts, CDs, bonds, and similar investments.
Financial institutions, banks, brokerages, and other payers must file Form 1099-INT if they pay $10 or more in interest income, including interest on U.S. savings bonds or tax-exempt interest. They must also file it if they withhold federal or foreign taxes on the interest.
Recipients typically receive Form 1099-INT by January 31 of the year following the tax year. This form details the interest income paid to them during the year and is used to report that income on their federal tax returns.
Form 1099-INT reports various types of interest income including taxable interest from bank accounts, CDs, corporate bonds, interest on U.S. savings bonds, Treasury obligations, and tax-exempt interest. It also includes any early withdrawal penalties and backup withholding amounts.
Yes, if you earn interest from different payers like multiple banks or brokerages, you may receive multiple Form 1099-INTs. You must report all interest income from each form on your federal tax return.
Failing to report the interest income listed on Form 1099-INT can result in the IRS sending you a CP2000 notice for underreported income. It’s important to include all interest income on your tax return to avoid penalties and additional taxes.
Yes, payers are allowed to truncate your Taxpayer Identification Number (TIN) on the form by showing only the last four digits to help protect your personal information from unauthorized access.
