Form 1099-INT is an IRS tax form used to report interest income paid to a taxpayer during the year. Entities such as banks, financial institutions, brokerages, and other payers must issue this form if they pay at least $10 in interest to an individual or business
What Form 1099-INT Reports to the IRS
- Taxable Interest Income (Box 1): The total amount of taxable interest paid, such as interest earned from savings accounts or bank deposits
- Interest on U.S. Savings Bonds and Treasury Obligations (Box 3): Interest from U.S. government securities, which may sometimes be tax-exempt
- Tax-Exempt Interest (Box 8): Interest earned on certain state and local government obligations, like municipal bonds, which is generally exempt from federal income tax but still reported
- Interest Penalties (Box 2): Penalties charged for early withdrawal of funds from an interest-bearing account
- Federal Income Tax Withheld (Box 4): Any federal tax withheld on the interest income by the payer, which can reduce the taxpayer's overall tax liability
- Foreign Tax Paid: If foreign tax was withheld and paid on interest, this must also be reported
- Backup Withholding: If federal income tax was withheld under backup withholding rules, it must be reported regardless of the amount
Purpose
The IRS uses the information on Form 1099-INT to verify that taxpayers accurately report their interest income on their tax returns. Taxpayers must include the interest amounts from the form on their federal income tax returns, even if some of the interest is tax-exempt
Filing Requirements
- Issued to any person who receives at least $10 in interest during the year.
- Must be sent to the recipient by January 31 and filed with the IRS by the payer.
- Helps the IRS cross-check reported income to ensure compliance
In summary, Form 1099-INT reports detailed information about interest income paid to taxpayers, including taxable interest, tax-exempt interest, withheld taxes, and penalties, allowing the IRS to track and verify interest income for tax purposes.
