Form 1099-INT is a tax form on which interest payers report interest they paid to eligible recipients. This form, usually not required to be filled in by individuals, is sent not only to interest recipients but also to the IRS and each interest recipient’s state tax department.
Learn more about when Form 1099-INT needs to be filed and by whom.
Definition and Example of Form 1099-INT
Form 1099-INT is a tax form used to report interest paid to interest recipients, the IRS, and the recipient’s state tax department. Generally, Form 1099-INT is only issued to recipients who were paid at least $10 of interest during the year, but this threshold drops to zero for recipients for whom the interest payer withheld foreign taxes or backup withholding.
For example, if you open and deposit money into a savings account in January of this year, and the bank pays you a dollar of interest each month, you will have received $12 in interest during the year from this bank. Therefore, the bank is required to send you a Form 1099-INT by Jan. 31 of the following year to report this $12 of interest it paid you.
How Form 1099-INT Works
The purpose of Form 1099-INT is to let the IRS, state tax departments, and interest recipients know how much interest was paid to each interest recipient during the year.
Form 1099-INT has several boxes, and perhaps the one most familiar to taxpayers is Box 1. This is the box that is used to report most forms of interest, such as that paid by a bank to its customers.
Not all interest income is taxable. For example, often interest paid by municipal bond funds is tax-exempt. This tax-exempt interest income is reported in Box 8 of Form 1099-INT.
As with all tax forms, the IRS has specific rules and deadlines for the preparation and filing of Form 1099-INT.
How To File Form 1099-INT
If you merely received but did not pay interest during the year, you do not need to file Form 1099-INT, though Forms 1099-INT you receive may help you in preparing your own tax return.
If you paid interest during the year, you must first determine whether you need to file Form 1099-INT at all. For example, if you are an individual, it’s unlikely that you need to file Form 1099-INT, even if you paid interest to others during the year, because interest on obligations issued by individuals does not need to be reported on Form 1099-INT.
You must also determine whether a Form 1099-INT is required to be filed for each recipient you paid interest during the year based on the kind of recipient they are as well as how much interest you paid to them.
Generally, if an interest recipient is a corporation or tax-exempt organization, you do not need to file a Form 1099-INT to report interest paid to them. So even if you paid a corporation $1,000 of interest during the year, you do not need to file a Form 1099-INT to report this interest.
Also, if you paid an interest recipient less than $10 of interest during the year, you generally do not need to issue them a Form 1099-INT. So if you paid someone only $9 of interest during the year, you do not need to file a Form 1099-INT to report this interest.
Although there are some other, lesser-used exceptions, the general rule is that you must file a Form 1099-INT for each non-corporate, non-tax-exempt person or entity to whom you paid at least $10 of interest during the year.
The deadline to issue Form 1099-INT to interest recipients is January 31 of the following year, though the deadline to file Form 1099-INt with the IRS is the last day of February if paper filing and March 31 if electronically filing. State tax departments have their own due dates for when Form 1099-INT must be filed with them.
Who Uses Form 1099-INT?
Form 1099-INT is used by interest payers, interest recipients, the IRS, and state tax departments.
Interest payers use Form 1099-INT to report the interest they paid during the year to interest recipients, the IRS, and state tax departments.
Interest recipients use Form 1099-INT to prepare their tax returns. Although taxpayers are required to report all taxable and tax-exempt interest income on their tax return regardless of whether they received Forms 1099-INT for it, the Form 1099-INT is helpful because it indicates to the taxpayer all of the interest income they earned during the year from a particular payer.
Taxpayers should still compare the Form 1099-INTs they received with their own records to make sure the interest payer did not make errors when preparing the Form 1099-INT.
The IRS and state tax departments use Form 1099-INTs filed with them to ensure that taxpayers correctly report their interest income. For example, if the IRS receives several Forms 1099-INT indicating the amount of reportable interest income a particular taxpayer was paid during the year, but that taxpayer does not report interest income on their return or reports less interest income on their return than indicated on the Forms 1099-INT issued to them, the IRS will likely adjust that taxpayer’s return to account for the unreported interest income.
Form 1099-INT vs. Form 1099-OID
When a bond is sold at a discount, the IRS considers that discount a special form of interest called original issue discount (OID).
OID is amortized over the life of the bond, and a taxpayer’s amortization on their discount during the year is the taxpayer’s taxable OID for the year.
Although OID is considered interest income for tax purposes, it is not reported on Form 1099-INT but rather on Form 1099-OID.
- Form 1099-INT is a tax form used to report interest income.
- Form 1099-INT is prepared by interest payers with copies sent to interest recipients, the IRS, and the recipient’s state tax department.
- If you receive a Form 1099-INT, you will likely need to report it on your tax return, assuming you have a tax return filing requirement.
- Even if you don’t receive Forms 1099-INT for the interest you received during the year, you must still report all interest you received during the year on your tax return.