What Form 1099-INT (2017) is for
Form 1099-INT reports interest income that a person may receive from a financial institution or another entity during the tax year. The form includes interest from taxable bonds, savings bonds, private activity bond interest, and treasury obligations. The Internal Revenue Service uses the interest income reported to match taxpayer information. Taxpayers then use the amounts to complete the correct tax form and file an accurate federal income tax return.
When you’d use Form 1099-INT (2017)
Taxpayers use Form 1099-INT when they receive interest income totaling at least ten dollars from a financial institution or any obligations issued by a foreign country. The interest earned may include taxable interest income, tax-exempt interest, or other interest payments requiring reporting. Payers send the required recipient copies by postal mail or electronically. Taxpayers then report interest income and file tax returns using paper filing or e-filing, depending on their preferred method.
Key rules or details for 2017
- Reporting threshold: Payors issue the form when interest income reaches $10, and this requirement ensures taxpayers report interest received accurately across multiple accounts. This rule applies to taxable interest, tax-exempt interest, and ordinary income from treasury bills and treasury notes.
- Backup withholding: Backup withholding applies when a person provides an incorrect account number or taxpayer identification number, and the Internal Revenue Service withholds a percentage of interest paid. The withheld amount appears on the form and reduces the net amount received.
- Tax-exempt interest: Tax-exempt interest still appears on the form because the IRS considers it important for overall reporting, and it may influence calculations such as taxable income limits. The information includes interest from tax-exempt bond and private activity bond obligations.
- Foreign tax reporting: Foreign tax may be reported when a foreign country and its taxpayers report that amount on their federal income tax return. This requirement helps ensure the correct reporting of income received on obligations issued by non-U.S. entities.
- Treasury obligations: Interest from treasury obligations must be reported, and some states treat this interest differently for income tax purposes. The form includes interest earned from treasury bills, treasury notes, and similar debt instrument products.
- Original issue discount: Some debt instruments involve the original issue discount, and the IRS considers this part of the interest received. Taxpayers must report it along with market discount and bond premium adjustments.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-step (high level)
Step 1: Receive the form
Financial institutions or other entities that pay interest send Form 1099-INT to taxpayers, either via postal mail or electronically. Each payer sends a recipient copy showing interest received, tax-exempt amounts, foreign tax, and other required information. Taxpayers keep the form with their tax forms for accurate reporting.
Step 2: Review the details
Each taxpayer reviews the form to confirm taxable interest, tax-exempt interest, private activity bond interest, treasury obligations, and backup withholding. The information must match account statements and reported payments from each institution. Reviewing the details helps ensure that the tax return accurately reflects all the necessary information.
Step 3: Gather all forms
People with multiple accounts collect every Form 1099-INT received from banks, brokers, or other financial institutions. Each form includes interest earned, market discount, bond premium information, and other items required for accurate reporting. Gathering forms prevents missing income that may trigger IRS matching notices.
Step 4: Report the amounts
Taxpayers report interest income, foreign tax, tax-exempt interest, and other information on the appropriate section of the federal income tax return. The amounts flow into ordinary income and are included in gross income for tax purposes. The taxpayer uses the correct tax form lines in accordance with the Internal Revenue Service's instructions.
Step 5: Address special situations
Situations involving early withdrawal penalties, backup withholding, or original issue discount require special attention. Each item on the form influences how taxpayers report their taxable income. Addressing these situations correctly ensures the tax return reflects the correct net amount for income and withholding.
Step 6: Store records
Taxpayers store each recipient copy with their tax documents and keep the forms for several years as recommended by the IRS. Stored records provide support if questions arise regarding reporting after filing. Keeping documentation helps respond to IRS inquiries about interest reported or payments included on the form.
Learn more about federal tax filing through our IRS Form Help Center.
Common mistakes and how to avoid them
- Missing small accounts: Taxpayers sometimes overlook deposits generating a few dollars of interest, which can trigger IRS notices. They can avoid this problem by keeping a list of all accounts and confirming that each form is received and reported.
- Incorrect tax-exempt reporting: Taxpayers may think tax-exempt interest requires no reporting, and this misunderstanding leads to incomplete returns. They can avoid this mistake by entering all tax-exempt bond amounts, even if the income tax impact is minimal.
- Incorrect identification information: Forms may contain errors in account numbers or recipient information, which can lead to IRS mismatches. Taxpayers can avoid problems by confirming that each form lists the correct account number and personal information.
- Ignoring early withdrawal items: Taxpayers sometimes overlook early withdrawal penalties listed on the form, which can impact taxable income. They can avoid this issue by carefully reviewing every box and entering the penalty on the corresponding line of the tax return.
- Not including foreign tax: Foreign tax amounts may be overlooked when interest originates from a foreign country, which can impact credits or deductions. By reviewing each payer's reporting and accurately entering the foreign tax on the federal tax return, taxpayers can avoid this situation.
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 IRS matches the interest income reported on Form 1099-INT with the amounts taxpayers include on their tax returns. Matching helps confirm that payments, obligations issued, and other details appear correctly. The IRS contacts the taxpayer for clarification or to request corrected forms if it finds differences. Consistent reporting helps prevent notices and delays.
FAQs
How does Form 1099-INT 2017 affect federal income tax reporting?
Form 1099-INT 2017 reports interest income that contributes to gross income, and taxpayers include the amounts on their federal income tax return to ensure proper reporting.
How does foreign tax on 1099-INT interest income get reported?
Foreign tax on 1099-INT interest income appears on the form, and taxpayers may claim a credit or deduction depending on filing status and tax form instructions.
Why does a tax-exempt bond still appear on a 1099-INT?
A tax-exempt bond still appears because tax-exempt interest influences overall reporting and may affect limits tied to taxable income and other tax calculations.
When should a taxpayer file Form 1099-INT if paper filing is required?
A taxpayer must file Form 1099-INT by the Internal Revenue Service deadline when paper filing is required, and payers must send all recipient copies on time.
How do early withdrawal items influence 1099-INT interest income?
Early withdrawal amounts reduce net interest, and taxpayers are penalized separately on their tax return. Reporting helps ensure taxable interest income reflects the correct amount.
How does the market discount appear on 1099-INT recipient copies?
A market discount occurs when bonds are purchased below their face value, and the discount becomes taxable interest. Recipient copies display the necessary information for reporting.
