If you receive a 1099-INT, the tax form that reports most payments of interest income, you may or may not have to pay income tax on the interest it reports. However, you may still need to include the information from it on your return.
Key Takeaways
- If a bank, financial institution, or other entity pays you at least $10 of interest during the year, it is required to prepare a Form 1099-INT, send you a copy by January 31, and file a copy with the IRS.
- If you receive a Form 1099-INT, you’ll need to include the amount shown in Box 1 on the “taxable interest” line of your tax return.
- Report any tax-exempt interest shown in Box 8 of the 1099-INT on the “tax-exempt interest” line of your tax return.
- Including federal tax withheld shown in Box 4 of the 1099-INT on your tax return could reduce the amount of tax you’ll owe or increase your refund.
Interest income
The Internal Revenue Service requires most payments of interest income to be reported on tax form 1099-INT by the person or entity that makes the payments. This is most commonly a bank, other financial institution or government agency. If you receive a 1099-INT, you may not have to pay income tax on the interest it reports, but you may still need to report it on your return.
1099-INT filing requirements
When you file your taxes, you don’t need to attach copies of the 1099-INT forms you receive, but you do need to report the information from the forms on your tax return. That’s because each bank, financial institution or other entity that pays you at least $10 of interest during the year is required to:
- prepare a 1099-INT,
- send you a copy by January 31, and
- file a copy with the IRS.
The IRS uses the information on the 1099-INT to compare the amount on the form to what you report on your tax return.
TurboTax Tip:
If you were charged interest penalties for withdrawing money from an account before the maturity date (shown in Box 2 of Form 1099-INT), you may be able to take a deduction on Schedule 1 of Form 1040 as an adjustment to income.
Taxation of interest
When you receive a 1099-INT, you’ll need to understand what each box of the form is reporting, so that you can report your interest on the appropriate lines of your tax return:
- Box 1 of the 1099-INT reports all taxable interest you receive, such as your earnings from a savings account.
- Box 2 reports interest penalties you were charged for withdrawing money from an account before the maturity date.
- Box 3 reports interest earned on U.S. savings bonds or Treasury notes, bills or bonds. Some of this may be tax-exempt.
- Box 4 reports any federal tax withheld on your interest income by the payer.
- Box 8reports tax-exempt interest and relates to interest-bearing investments you hold with state and local governments, such as municipal bonds.
Reporting 1099-INT information
The amount reported in box 1 needs to be reported on the “taxable interest” line of your tax return and are taxed in the same way as the other income you report on the return.
For the penalty amounts reported in box 2, you may be able to take a deduction on Schedule 1 of Form 1040 as an adjustment to income.
Although the tax-exempt interest reported in box 8 of the 1099-INT isn’t taxable, you still need to report it on the “tax-exempt interest” line of your tax return for informational purposes and for certain other tax calculations.
It is also important to report all federal tax withheld reported in box 4 in the “payments” section of your return. Doing so will either reduce the amount of tax you’ll owe with your return or will increase your refund.
Schedule B implications
You'll need to prepare a Schedule B with the name of each payer and the amount of interest received when the combined total of taxable interest exceeds $1,500.
- If box 3 of your 1099-INT includes interest from U.S. savings bonds that were issued after 1989, you may be eligible to exclude those amounts from tax if you use the proceeds to pay qualified higher education expenses. In order to do so, you’ll need to report the excludable amount on Schedule B and prepare Form 8815.
- If you receive interest income as a nominee (i.e., you receive interest that actually belongs to someone else), you need to still report the income on Schedule B, but you then subtract it out as a “Nominee Distribution.” In this case, you will also need to report the interest belonging to the other party by issuing a Form 1099-INT to them and send a copy to the IRS.
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FAQs
Key Takeaways
If you receive a Form 1099-INT, you'll need to include the amount shown in Box 1 on the “taxable interest” line of your tax return. Report any tax-exempt interest shown in Box 8 of the 1099-INT on the “tax-exempt interest” line of your tax return.
Do I have to report interest income less than $1500? ›
Reporting interest income on your tax return
You should report tax-exempt and taxable interest on your income tax return (lines 2a and 2b of the 1040). You may also be required to file Schedule B, if your taxable income is more than $1,500 or under certain other conditions (see the form instructions).
Do you need to report interest income under $10? ›
Even if you did not receive a Form 1099-INT, or if you received $10 or less in interest for the tax year, you are still required to report any interest earned and credited to your account during the year. The payer's identification number and address are not needed.
What happens if I don't report 1099-INT? ›
If you receive a Form 1099-INT and do not report the interest on your tax return, the IRS will likely send you a CP2000, Underreported Income notice. This IRS notice will propose additional tax, penalties and interest on your interest payments and any other unreported income.
Do I need to report my 1099-INT on my return? ›
You use your IRS Form 1099-INT to help figure out how much income you received during the year and what kind of income it was. You'll report that income in different places on your tax return, depending on what kind of income it was.
What are the rules for 1099-INT? ›
Form 1099-INT is issued by all entities that pay interest income to investors during the tax year. It includes a breakdown of all types of interest income and related expenses. Payers must issue a 1099-INT by Jan. 31 of the new year for any party to whom they paid at least $10 of interest during the preceding year.
Do I need to report 1099-INT if less than 10? ›
Yes. Although payers don't have to provide a 1099-INT for amounts under $10 that doesn't relieve you of the obligation to report it. Just report it "as if" you received a 1099-INT. There's no problem reporting it this way.
Do I have to report interest income less than $200? ›
Technically, there is no minimum reportable income: any interest you earn must be reported on your income tax return. So, even if you don't receive a Form 1099-INT, you are still legally required to report all interest on your taxes.
What is the minimum interest income that must be reported? ›
Interest on bonds, mutual funds, CDs, and demand deposits of $10 or more is taxable. Taxable interest is taxed just like ordinary income. Payors must file Form 1099-INT and send a copy to the recipient by January 31 each year. Interest income must be documented on Schedule B of IRS Form 1040.
Is there a minimum amount for 1099-INT? ›
File Form 1099-INT, Interest Income, for each person: To whom you paid amounts reportable in boxes 1, 3, or 8 of at least $10 (or at least $600 of interest paid in the course of your trade or business described in the instructions for Box 1.
You must report all taxable and tax-exempt interest on your federal income tax return, even if you don't receive a Form 1099-INT or Form 1099-OID. You must give the payer of interest income your correct taxpayer identification number; otherwise, you may be subject to a penalty and backup withholding.
Will the IRS catch a missing 1099 INT? ›
The IRS employs various methods to detect discrepancies in tax reporting, including the absence of 1099 forms. While the IRS does not catch every missing 1099 immediately, their sophisticated systems and data-matching capabilities make it likely that discrepancies will be identified over time.
Will I get audited if I forgot a 1099-INT? ›
Remember that an audit is not a certainty just because of a missing 1099. The IRS receives a lot of information and only audits a small percentage of tax returns each year. However, it's still important to correct your tax filing.
What interest income is not taxable? ›
Tax-free refers to certain types of goods and/or financial products, such as municipal bonds, that are not taxed. Series I bond is an interest-bearing U.S. government savings bond that earns a combined fixed interest and variable inflation rate (adjusted semiannually).
How do I report interest income? ›
Interest on bonds, mutual funds, CDs, and demand deposits of $10 or more is taxable. Taxable interest is taxed just like ordinary income. Payors must file Form 1099-INT and send a copy to the recipient by January 31 each year. Interest income must be documented on Schedule B of IRS Form 1040.
Where should interest income be reported? ›
If your taxable interest income is more than $1,500, be sure to include that income on Schedule B (Form 1040), Interest and Ordinary Dividends and attach it to your return. Please refer to the Instructions for Form 1040-NR for specific reporting information when filing Form 1040-NR.
How do I report interest income from the IRS? ›
Interest income can be reported on Form 1040, U.S. Individual Income Tax Return, Form 1040-SR, U.S. Tax Return for Seniors or Form 1040-NR, U.S. Nonresident Alien Income Tax Return.
How do I report interest income from Treasury bills? ›
Interest from Treasury bills (T-bills) is subject to federal income taxes but not state or local taxes. The interest income received in a year is recorded on Form 1099-INT. Investors can opt to have up to 50% of their Treasury bills' interest earnings automatically withheld.
