Form 1099-INT
Interest Income
Interest Income
A 1099-INT, “Interest Income”, is a form used in the U.S. to report interest income received during the tax year to both the Internal Revenue Service (IRS) and the person or entity who received the income. This form is part of the 1099 series, which are used to report various types of income that individuals may receive throughout the year other than salary from an employer. It is an essential document for tax reporting purposes, ensuring that interest income is correctly reported to the IRS.
Per the IRS, file Form 1099-INT for each person:
- To whom you have paid amounts of at least $10, reportable in boxes 1, 3, and 8.
- For whom you withheld, and on whose behalf you paid, any foreign tax on interest.
- From whom you withheld (and did not refund) any federal income tax under the backup withholding rules regardless of the amount of the payment.
View More About Form 1099-INT on IRS.gov
Quick Links
- Why do you need to file a 1099-INT?
- Who Needs to File a 1099-INT?
- Are there any exemptions to filing a 1099-INT?
- What is the deadline for filing a 1099-INT?
- What is required to file a 1099-INT?
- What are the penalties for 1099-INT?
- Do you need to e-file a 1099-INT?
- Is state filing required for the 1099-INT?
- What elements make up a 1099-INT form?
- Can you correct a 1099-INT?
Why do you need to file a 1099-INT?
The 1099-INT form is a type of information return used in the U.S. to report interest income that someone receives during the year which isn’t considered regular wages, salaries, or tips. The form is provided by the entity that paid the income to the recipient and a copy is also sent to the Internal Revenue Service (IRS). Here are the primary aspects of the form:
You Paid Interest to Someone
- If you are an individual, business, or entity that pays interest to someone, you might need to file a 1099-INT to report that interest. However, there are specific circumstances under which this is required, such as when the interest paid to a particular individual exceeds $10 in a given tax year.
Tax Reporting
- The IRS requires taxpayers to report their income, and that includes interest income. If you receive a 1099-INT from a bank or other entity, it’s because they’re reporting to the IRS the amount of interest they paid to you. You, in turn, need to report this on your tax return.
For Banks and Financial Institutions
- Banks, credit unions, and other financial institutions that pay interest on deposits (like savings accounts or CDs) typically issue 1099-INT forms to account holders to whom they’ve paid interest. This ensures proper tax reporting and compliance.
For Bonds and Other Debt Instruments
- If you hold a bond or another debt instrument that pays interest, the payer might be required to send you a 1099-INT if the interest paid during the year meets the reporting threshold.
Backup Withholding
- If you are subject to backup withholding, the bank or entity paying you interest will need to withhold a portion of the interest for the IRS. The withheld amount, as well as the interest paid, will be reported on the 1099-INT.
Proof of Income
- From the recipient’s perspective, having a 1099-INT can also serve as proof of income, which might be needed for loan applications or other financial matters.
Avoiding Potential IRS Issues
- Issuing a 1099-INT when required ensures that the payer is in compliance with tax laws. Not issuing it when required can lead to penalties.
Individuals receiving a 1099-INT will use the information on the form to report interest income on their personal income tax return, typically on the IRS Form 1040 or 1040-SR.
Who needs to file a 1099-INT?
The Form 1099-INT is primarily used to report interest income. The responsibility to file a 1099-INT typically lies with entities or individuals that pay interest. Here’s a breakdown of who typically needs to file a 1099-INT:
Banks and Financial Institutions
- These are the most common issuers of 1099-INT forms. If they pay interest on accounts like savings accounts, CDs (Certificates of Deposit), or other interest-bearing accounts, and that amount is $10 or more in a year, they are generally required to send the account holder a 1099-INT.
Businesses
- If a business pays interest to an individual or another business (that is not a corporation) and it amounts to $600 or more in a year, they typically need to file a 1099-INT. This is commonly seen in cases of vendor notes or other interest-bearing arrangements.
Governments
- Federal, state, and local governments that pay interest may need to issue a 1099-INT. For instance, if you earn interest on a tax refund, you might receive a 1099-INT from the government agency.
Brokers or Other Middlemen
- In cases where interest is paid on bonds or other investments, a broker or middleman who handles interest payments to the beneficial owner might be required to file a 1099-INT.
Trusts or Estates
- If a trust or estate pays out interest to beneficiaries, it may be required to issue a 1099-INT if the payment meets or exceeds the reporting threshold.
Other Entities
- Any other entity or individual that pays reportable interest income, as defined by the IRS, to another party may have a responsibility to file a 1099-INT.
Are there any exemptions to filing a 1099-INT?
Yes, there are several situations in which you don’t need to file a 1099-INT, even if you’ve made payments during the course of your trade or business. Here are some of the exemptions:
Corporations
- Generally, you do not need to file Form 1099-INT for interest payments made to corporations. This includes LLCs that are treated as C or S Corporations.
Interest Below Reporting Threshold
- Banks, for example, do not need to file a 1099-INT for interest payments totaling less than $10 to any individual in a given year. For most other businesses, the threshold is typically $600.
Tax-Exempt Organizations
- Payments made to tax-exempt organizations are generally not subject to 1099-INT reporting.
Government Agencies
- Interest payments made to federal, state, and local government agencies typically do not require a 1099-INT.
Certain Financial Institutions
- This includes payments to a mutual savings bank, cooperative banks, credit unions, domestic building and loan associations, and other savings institutions.
Registered Securities or Commodities Dealers
- Payments made to registered securities or commodities dealers in the course of their trading or dealing activities are generally exempt.
Interest on Tax-Free Covenant Bonds
- If the interest is paid on tax-free covenant bonds issued before 1983, a 1099-INT is generally not required.
Foreign Recipients
- Payments of interest made to certain foreign recipients can be exempt from 1099-INT reporting. However, these might be subject to other reporting requirements, such as Form 1042-S.
Certain Escrow Amounts
- Interest payments made with respect to an escrow account for a transaction involving property, goods, or services are exempt if the interest is paid to a buyer of property or services and the transaction is an arms-length transaction.
OID Nominees
- If you’re a nominee that holds an obligation (like a bond) showing OID (Original Issue Discount) for another person, and you receive a 1099-OID, you generally do not file a 1099-INT for the same account, unless you are reporting interest that wasn’t included on the 1099-OID.
What is the deadline for filing a 1099-INT?
The deadline for filing a 1099-INT can vary based on the several factors:
Sending to Recipients
- The 1099-INT form should be furnished to the recipient by January 31 of the year following the payment year.
Filing with the IRS
- If you are filing on paper, the 1099-INT forms should be submitted to the IRS by February 28 (or the last day of February) of the year following the payment year.
- If you are filing electronically, the deadline extends to March 31 of the year following the payment year.
However, if any of these dates fall on a weekend or a holiday, the deadline may be extended to the next business day. Additionally, if you discover an error after the initial filing, there are separate deadlines for corrected forms.
Remember, missing these deadlines can result in penalties, so it’s crucial to stay informed and act timely.
What is required to file a 1099-INT?
To file a Form 1099-INT, you will need certain information about both the payer (the person or business making the payment) and the recipient (the person or business receiving the payment). Here’s what is required to file a 1099-INT:
Information about the Payer
- Payer’s Name and Address
- Provide your legal business name and mailing address.
- Payer’s Taxpayer Identification Number (TIN)
- This could be your Employer Identification Number (EIN) or your Social Security Number (SSN), depending on your business structure. If you’re a sole proprietor, you might use your SSN; if you’re a business entity, you’d use your EIN.
- Payer’s Phone Number
- Include a phone number where the payer can be reached.
Information about the Recipient
- Recipient’s Name and Address
- Provide the legal name and mailing address of the individual or business receiving the payment.
- Recipient’s Taxpayer Identification Number (TIN)
- This could be the recipient’s Social Security Number (SSN) if an individual or their Employer Identification Number (EIN) if a business entity.
Form specific information
- No form specific data is required, however some information should be added to justify the submission of the 1099-INT form. The fields with amounts will vary based on the situation.
What are the penalties for 1099-INT?
Please see the penalties section for details.
Do you need to e-file a 1099-INT?
Please see the e-file section for details.
Is state filing required for the 1099-INT?
Please see the state filing section for details.
What elements make up a 1099-INT form?
The 1099-INT contains several boxes, each designed to report specific types of income or information. Here is a breakdown of the boxes on the 1099-INT:
- Box 1: Interest Income
- This is the main box to report most interest income, other than certain specific types of interest that are reported elsewhere on the form.
- Box 2: Early Withdrawal Penalty
- If there was a penalty for early withdrawal of savings (like from a Certificate of Deposit), it’s reported here.
- Box 3: Interest on U.S. Savings Bonds and Treasury Obligations
- Specific to interest from these sources.
- Box 4: Federal Income Tax Withheld
- Shows backup withholding or withholding on gaming profits.
- Box 5: Investment Expenses
- For single-class REMICs (Real Estate Mortgage Investment Conduits), this box is used to report investment expenses.
- Box 6: Foreign Tax Paid
- If any foreign taxes were paid on the interest income, it’s reported here.
- Box 7: Foreign Country or U.S. Possession
- If Box 6 has an amount, this box identifies the country or U.S. possession where the tax was paid.
- Box 8: Tax-Exempt Interest
- Interest that’s not subject to federal income tax is reported here.
- Box 9: Specified Private Activity Bond Interest
- Interest from specified private activity bonds that, although tax-exempt from regular federal income tax, may be subject to the Alternative Minimum Tax.
- Box 10: Market Discount
- For bonds acquired after 1984, this box reports the market discount that’s been accrued in the current year.
- Box 11: Bond Premium
- If there’s a bond premium on a Treasury obligation, it’s reported here.
- Box 12: Bond Premium on Tax-Exempt Bond
- This is the bond premium on a tax-exempt bond.
- Box 13: Bond premium on tax-exempt bond
- This is the bond premium on a tax-exempt bond.
- Box 14: Tax-Exempt and Tax Credit Bond CUSIP No
- This box provides the CUSIP (Committee on Uniform Securities Identification Procedures) number for the bond.
- Box 15-16 – State/Payer’s state no
- This box indicates the state for which the income and tax details are being reported. It will also include the payer’s state identification number, which is an identifier assigned by the state’s revenue or taxation department.
Please see the state filing section for details.
- Box 17 – State tax withheld
- If the payer withheld any state income tax on behalf of the recipient, the amount is reported in this box.
Remember, not all boxes will be filled out on every 1099-INT form. Only the relevant boxes for the specific payments made will have amounts or indicators.
Can you correct a 1099-INT?
Yes, you can correct a 1099-INT. Please see the corrections and negations section for details.