What is Form 1099-INT?
Form 1099-INT, Interest Income, is an Internal Revenue Service (IRS) form used by taxpayers to report all interest income paid during a tax year.
The 1099-INT IRS form records the amount of interest over $10 paid to a taxpayer by a person, bank, or entity during a tax year. At the end of the year, interest-paying firms must send the form to investors, which must include a breakdown of all sorts of interest revenue and expenses.
This form is used to find out how much money you made over the course of a tax year and what kind of money it was such as Interest Income, Federal Income Tax Withheld, and Tax Exempt Interest.
Who needs to use Form 1099-INT?
All organizations that pay interest income to investors must file Form 1099-INT. Interest income is referred to as any amount paid to account holders who deposit money into savings accounts, investments, and other interest-paying activities by banks, investment houses, mutual fund companies, and financial organizations. As a result, Form 1099-INT must be filed for each of the following individuals:
- Those who receive at least $10 or at least $600 of interest paid in the course of trade or business.
- Those from whom a financial institution withholds and pays foreign tax on interest.
- Those from whom a financial institution withholds and doesn’t refund federal income tax under the backup withholding rules regardless of how much is paid.
Any organization that pays interest, such as banks, brokerages, investment firms, mutual fund companies, and other financial institutions, must file Form 1099-INT. They must file the form for anyone who receives at least $10 in interest income, when they withhold and pay foreign taxes on interest, and when the issuer withholds federal income tax and does not refund it. One copy should be given to the IRS, while the other should be delivered to the taxpayer.
How to fill out Form 1099-INT?
Filling out Form 1099-INT is quick and simple, just follow the instructions below. To ensure the information submitted is correct and up to date, it will be helpful to prepare any records of relevant transactions.
There are multiple copies of Form 1099-INT that must be filled out. The instructions below apply to all copies of the form, but each form is sent to different recipients, so it is important to keep in mind which forms you are filling out.
Copy A is to be submitted to the IRS.
Copy 1 is to be given to the State Tax Department.
Copy B is to be given to the recipient.
Copy 2 is to be filed with the recipient's state income tax return, only when required.
Copy C is to be given to the payer.
Enter the full legal name of the payer.
Enter the following information of the payer in the space provided:
- City or Town
- State or Province
- ZIP or Foreign Postal Code
Enter the payer’s Tax Identification Number (TIN).
Enter the recipient’s Tax Identification Number (TIN).
Enter the full legal name of the recipient.
Enter the following information of the recipient’s in the space provided:
- City or Town
- State or Province
- ZIP or Foreign Postal Code
May show an account or other unique number the payer assigned to distinguish your account.
Item 1 – Interest Income
Enter the amount of taxable interest paid to you by the payer throughout the calendar year.
Item 2 – Early Withdrawal Penalty
Enter the amount of interest or principal forfeited due to an early withdrawal of time savings. This amount can be deducted from your adjusted gross income when filing your taxes.
Item 3 – Interest on U.S. Savings Bonds and Treasury Obligations
Enter the amount of interest on U.S. Savings Bonds, Treasury Bills, Treasury Bonds, and Treasury Notes. This may or may not all be taxable. State and local income taxes are not applied to this interest.
Item 4 – Federal Income Tax Withheld
Enter backup withholding.
Generally, the payer must backup withhold if you did not furnish your taxpayer identification number (TIN) or if you did not furnish the correct TIN to the payer.
Item 5 – Investment Expenses
Enter your share of investment expenses of a single-class REMIC. This amount is not deductible.
REMIC stands for Real Estate Mortgage Investment Conduit.
Item 6 – Foreign Tax Paid
Enter the amount of foreign tax paid. You may be able to claim this tax as a deduction or a credit on your Form 1040, U.S. Individual Income Tax Return, or Form 1040-SR, U.S. Tax Return for Seniors.
Item 7 – Foreign Country or U.S. Possession
Enter the country or U.S. possession to which the foreign tax was paid.
Item 8 – Tax Exempt Interest
Enter the amount of tax-exempt interest paid to you by the payer throughout the calendar year. Backup withholding may apply to this amount.
Item 9 – Specified Private Activity Bond Interest
Enter the amount of tax-exempt interest that will be subject to the alternative minimum tax. This sum is accounted for in box 8.
Item 10 – Market Discount
For a taxable or tax-exempt covered security, if you made an election to include market discount in income as it accrues and you notified your payer of the election in writing, enter the market discount that accrued on the debt instrument during the year while held by you, unless it was reported on Form 1099-OID, Original Issue Discount.
For a taxable or tax-exempt covered security, accrued market discount will be calculated on a constant yield basis unless you notified your payer in writing that you did not want to make a constant yield election for market discount. Report the accrued market discount on your income tax return. Market discount on a tax-exempt security is includible in taxable income as interest income.
Item 11 – Bond Premium
For a taxable covered security (other than a U.S. Treasury Obligation), enter the amount of premium amortization allocable to the interest payment(s), unless you notified the payer in writing that you did not want to amortize bond premium. If an amount is reported in this box, see the Instructions for Schedule B (Form 1040), Interest and Ordinary Dividends.
If an amount is not reported in this box for a taxable covered security acquired at a premium and the payer is reporting premium amortization, the payer has reported a net amount of interest in box 1. If the amount in this box is greater than the amount of interest paid on the covered security, see Regulations section 1.171-2(a)(4).
Item 12 – Bond Premium on Treasury Obligations
For a U.S. Treasury obligation that is a covered security, enter the amount of premium amortization allocable to the interest payment(s), unless you notified the payer in writing that you did not want to amortize bond premium. If an amount is reported in this box, see the Instructions for Schedule B of Form 1040, Interest and Ordinary Dividends.
If an amount is not reported in this box for a U.S. Treasury obligation that is a covered security acquired at a premium and the payer is reporting premium amortization, the payer has reported a net amount of interest in box 3. If the amount in this box is greater than the amount of interest paid on the U.S. Treasury obligation, see Regulations section 1.171-2(a)(4).
Item 13 – Bond Premium on Tax Exempt Bond
For a tax-exempt covered security, enter the amount of premium amortization allocable to the interest payment(s). If an amount is not reported in this box for a tax-exempt covered security acquired at a premium, the payer has reported a net amount of interest in box 8 or 9, whichever is applicable. If the amount in this box is greater than the amount of interest paid on the tax-exempt covered security, the excess is a nondeductible loss. See Regulations section 1.171-2(a)(4)(ii).
Item 14 – Tax Exempt and Tax Credit Bond CUSIP No.
Enter the CUSIP number(s) for tax-exempt bond(s) on which tax-exempt interest was paid, or tax credit bond(s) on which taxable interest was paid or tax credit was allowed to you during the calendar year. If left blank by the payer, no CUSIP number was issued for the bond(s).
CUSIP stands for Committee on Uniform Securities Identification Procedures.
Items 15, 16, and 17 – State, State Identification No., & State Tax Withheld
State tax withheld reporting boxes.
Tips when filling out Form 1099-INT
Personal information, such as the payer’s and recipient’s addresses and TINs, are included on Form 1099-INT, as well as vital tax and transaction information. To avoid problems such as identity theft or tax fraud, it is critical to keep this form safe and ensure that it is submitted through structured and trustworthy channels to the relevant places and persons.
Ensure that all information is correct and that the form is submitted on time to the right location. This will help you avoid any penalties for providing the IRS with incorrect information and will ensure that your tax returns are handled correctly.
Make good contract management a habit. Make sure to store your copy of the form in a secure and well-organized location, or even duplicate it to ensure that you have a backup in case the original is damaged. This will be useful in the future for possible legal purposes, or simply as a record.