This isn’t a form that you fill out if you are the one receiving the interest income. It is filled out and filed by the institution or business issuing the interest, such as a bank. Form 1099-INT is usually only sent if you were paid at least $10 of interest during the year. This threshold drops to zero if foreign taxes or backup withholding were withheld from your interest income. 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 January 31 of the following year to report the $12 of interest it paid you.
How Form 1099-INT Works
The purpose of Form 1099-INT is to let the IRS and state tax departments know how much interest was paid as income during the year. This is included in your total taxable income, along with wages or other 1099 income. If you hold several accounts with an institution that all receive interest, you will be sent one 1099-INT for all those accounts. Form 1099-INT has several boxes. The one most taxpayers are familiar with is box 1. This box is used to report most forms of interest, such as that paid by a bank to its customers. The form has several copies, all of which need to be filled out and sent to the correct place. Each copy should have the same information on it. Some of these copies can be filled out online.
Copy A (in red): Sent to the Internal Revenue Service CenterCopy 1: Sent to the recipient’s state tax departmentCopy B: Sent to the recipient of the interest incomeCopy 2: Sent to the recipient so that they can use it when filing their state income tax return, when requiredCopy C: For the payer’s records
If you were the payer and paid the 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 and did not withhold any taxes from that $9, you do not need to file a Form 1099-INT to report this interest. As with all tax forms, the IRS has specific rules and deadlines for preparing and filing Form 1099-INT.
How To File Form 1099-INT
If you were the recipient of interest income, you should receive your copy of form 1099-INT from the payer at the beginning of the year. You don’t need to file this form, but you do need to include the information on it when you file your tax return. If you were the institution paying the interest, you will need to file copies with the IRS and the recipient’s state tax department. You must also determine whether a Form 1099-INT is required to be filed for each recipient you paid interest during the year. This is 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. Although there are some other 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. You’ll need to be aware of several deadlines if you are responsible for filing form 1099-INT.
January 31: Issue Form 1099-INT to recipients who received interest the previous year.February 28: File Form 1099-INT with the IRS if paper filing. March 31: File Form 1099-INT with the IRS if filing electronically.
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. If you paid interest during the year, you will use Form 1099-INT to report the payments to the interest recipients, the IRS, and state tax departments. If you received interest income, you will use Form 1099-INT to prepare your tax returns. Form 1099-INT will tell you all of the interest income you earned during the year from a particular payer. However, you’re required to report all taxable and tax-exempt interest income on your tax return regardless of whether you received Forms 1099-INT for it. The IRS and state tax departments use the Form 1099-INTs filed with them to ensure that taxpayers correctly report their interest income. For example, if the IRS might receive several Forms 1099-INT indicating the amount of reportable interest income a particular taxpayer was paid during the year. But if that taxpayer doesn’t report interest income on their return, the IRS will likely adjust that taxpayer’s return to account for the unreported 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. 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. Instead, it’s reported on Form 1099-OID.
