What Form 1099-INT Is For
Form 1099-INT reports interest income from a financial institution for the tax year. It helps the Internal Revenue Service confirm the interest income reported on a federal income tax return. Taxpayers receive this tax form when they earn interest from bank deposits, savings bonds, Treasury obligations, or similar debt instruments. The form also lists foreign tax paid, federal income tax withheld, and exempt interest and dividend income that may still affect taxable income.
When You’d Use Form 1099-INT for 2015
Taxpayers use Form 1099-INT when they receive interest payments of at least ten dollars from a financial institution or foreign financial institution. They also use it when managing multiple accounts or receiving interest from Treasury bills, Treasury notes, Treasury bonds, or private activity bonds. Amended or late filers must still report all interest received, including tax-exempt interest, taxable bond interest, or early withdrawal penalty amounts, even if more than one form applies.
Key Rules or Details for 2015
- Reporting thresholds: Financial institutions report interest income when payments total at least $10, and taxpayers must still enter all interest received to ensure the federal income tax return accurately reflects taxable income.
- Backup withholding: Backup withholding applies when account information does not meet Internal Revenue Service (IRS) requirements. Taxpayers must review backup withholding rules to avoid unexpected federal income tax withheld amounts.
- Tax-exempt interest: Tax-exempt interest requires reporting because exempt interest dividends or amounts from a tax-exempt bond may affect gross income calculations for certain tax forms.
- Foreign tax: Foreign tax paid requires careful review, and taxpayers must enter the foreign tax paid amount on the tax return when claiming a credit related to interest income reported by a foreign country.
- Treasury obligations: Treasury obligations follow specific interest rules that require taxpayers to handle Treasury bills and Treasury notes correctly, ensuring that state income tax adjustments appear properly on the federal income tax return.
- Bond premium: The bond premium affects how taxable interest income is calculated, and taxpayers must consider market discounts or details about covered security purchases when evaluating different bonds.
- Private activity bonds: The interest on private activity bonds requires reporting because the specified private activity bonds or a tax credit bond CUSIP can influence taxable income, depending on the defined rules of the private activity bond.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step (High Level)
Step 1: Gather your forms
Taxpayers gather all Form 1099-INT documents from each financial institution, foreign financial institution, or life insurance company. They must confirm the account number, filing method, and accuracy of the reporting payment, as receiving more than one form is common when interest earned appears across multiple accounts.
Step 2: Review the interest amounts
Taxpayers review taxable interest, tax-exempt interest, and private activity bond interest to ensure every interest payment appears correctly. This includes interest received from Treasury obligations, bank deposits, mutual fund accounts, debt instruments, or specified private activity bonds that may increase gross income.
Step 3: Enter the amounts on the tax return
Taxpayers report interest income on the federal income tax return by entering taxable interest income, exempt interest dividends, and federal income tax withheld amounts on the appropriate tax forms. They must report foreign tax paid entries, early withdrawal penalty entries, and income tax adjustments exactly as listed.
Step 4: Handle missing or incorrect forms
Taxpayers should contact each financial institution or other relevant entity if a tax form is missing, incomplete, or incorrect. They may receive updated documents through postal mail when corrected figures are required, and they must still pay income tax on all amounts, even when waiting for a replacement.
Step 5: Keep organized records
Taxpayers retain copies of Form 1099-INT, account statements, and supporting investment expenses for the entire retention period. These documents support any Internal Revenue Service review related to utility services authorities' reporting, community redevelopment agencies' reporting, or finance-eligible expenditures connected to interest earned.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Not reporting smaller amounts: Some taxpayers incorrectly skip reporting small amounts of taxable interest, which creates mismatches. They avoid this mistake by reviewing interest earned across all accounts and entering every amount listed on the tax form.
- Ignoring tax-exempt entries: Some taxpayers overlook tax-exempt entries, such as those from tax-exempt bonds or exempt interest dividends, which can impact gross income calculations. They avoid this issue by entering all exempt interest exactly as reported by the financial institution.
- Missing foreign tax details: Some taxpayers overlook foreign tax-paying entries from foreign financial institutions, which reduces potential credits. They avoid this by entering every foreign tax figure and verifying the information on the tax return of the foreign country.
- Overlooking early withdrawal items: Some taxpayers overlook early withdrawal or early withdrawal penalty entries when closing a certificate of deposit, which can result in incorrect taxable income. They avoid this error by checking every box on Form 1099-INT before filing.
- Mixing treasury items: Misreporting treasury obligations or incorrectly entering them into interest adjustments can affect state income tax reporting. They avoid this by separating treasury bills, treasury notes, and treasury bonds from other interest payments.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
The Internal Revenue Service compares all interest income reported on the tax return to the interest income reported by financial institutions. If the figures differ, the agency may request clarification through paper filing notices or automated correspondence. Taxpayers maintain their documents to confirm the interest income reported and ensure any adjustments appear correctly on the federal income tax return.
FAQs
What is included on Form 1099-INT 2015 for federal income tax reporting?
Form 1099-INT lists interest income, federal income tax withheld, exempt interest, foreign tax, and bond details that taxpayers must enter on their federal tax forms.
How do I handle foreign tax amounts when foreign tax applies?
Foreign tax amounts appear on the form when a foreign country withholds tax. Taxpayers may claim a credit or deduction based on the instructions for their federal income tax return.
Does a tax-exempt bond on Form 1099-INT affect taxable income?
A tax-exempt bond does not increase federal income tax liability; however, the exempt interest still requires reporting because it affects other income tax calculations.
What happens if the federal income tax withheld appears on my Form 1099-INT?
Federal income tax withheld reduces the total tax due on the federal return. Taxpayers must enter this withholding amount exactly as shown on the tax form.
How do Treasury obligations affect Form 1099-INT interest income?
Treasury obligations influence state income tax calculations. Taxpayers report these entries separately so the return properly reflects interest from Treasury bills, Treasury notes, or Treasury bonds.
When should taxpayers file Form 1099-INT if early withdrawal applies?
Taxpayers do not file Form 1099-INT themselves, but they must report all interest and early withdrawal penalty entries exactly as provided by each financial institution.
How does market discount influence interest income on a tax return?
Market discount increases taxable interest income when bonds are sold below their face value. Taxpayers enter the amount shown on the form to ensure accurate federal income tax reporting.
