What Form 1099-INT Is For
Form 1099-INT reports interest income you receive during the tax year from any financial institution or other entity. The form includes taxable interest income, tax-exempt interest, private activity bond interest, and federal income tax withheld. You use this information to prepare your federal income tax return accurately, especially if you receive interest payments from savings bonds, treasury obligations, or a foreign financial institution.
When You’d Use Form 1099-INT
You use this tax form when you receive interest income of any amount, even if a financial institution is not required to send the form. Taxpayers who discover incorrect information or missing forms update their tax returns using the appropriate form, such as an amended return. Financial institutions issue recipient copies by the applicable time using postal mail or e-filing.
Key Rules or Details for 2013
- Reporting requirements: Financial institutions issue Form 1099-INT when interest paid exceeds $10; however, taxpayers must still report interest income even when the amount is lower or when no form is received.
- Taxable classifications: Taxable interest includes dividends earned from bank accounts, treasury notes, savings bonds, or any debt instrument, and you must pay income tax on these amounts when you file your federal income tax return.
- Tax-exempt categories: Tax-exempt interest from a tax-exempt bond appears separately because it affects gross income calculations, even though you do not pay federal income tax on these amounts.
- Backup withholding: Backup withholding applies when account number information or taxpayer identification is incorrect, and the financial institution must send federal income tax withheld directly to the Internal Revenue Service.
- Foreign reporting: Interest received from a foreign financial institution may trigger a FATCA filing requirement, and taxpayers report this information on the appropriate tax forms used for international income reporting.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step (High Level)
Step 1: Gather recipient copies
Collect all recipient copies from every financial institution or other entity, especially when you have multiple accounts or interest payments from a foreign country. Each form may include interest income reported, federal income tax withheld, market discount, bond premium, or private activity bond interest.
Step 2: Review the interest income reported
Check each tax form for accuracy, including the account number, face value amounts, maturity date information, and whether the form includes interest from treasury bills, treasury obligations, or obligations issued by a single class REMIC. Confirm that the net amount and ordinary income sections match your records.
Step 3: Report the information on your tax return
Enter taxable interest on your federal income tax return and list tax-exempt interest separately. Use the same information shown on the IRS form and follow the filing method you have chosen, such as e-filing or paper filing. Ensure that all interest received and any foreign tax appear accurately.
Step 4: Apply deductions or adjustments
Adjust for early withdrawal penalties, bond premium, or market discount when applicable. Certain covered security rules apply to specific debt instruments, and taxpayers must include all applicable adjustments when calculating their income tax owed. Use IRS instructions or the IRS website to confirm the correct treatment.
Step 5: Keep all forms for recordkeeping
Store tax forms, recipient copies, and any communications from financial institutions for your future tax returns. The Internal Revenue Service may request documentation through postal mail or the telephone number listed on your return, especially when mismatches appear between amounts reported on Form 1099-INT and your tax return.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Incorrectly reporting taxable interest: Taxpayers sometimes report taxable interest as ordinary income without checking whether it includes interest from savings bonds or treasury notes. You can avoid this error by reviewing each tax form carefully before completing your federal income tax return.
- Omitting tax-exempt interest: Some filers assume tax-exempt interest never appears on tax returns, but it still influences gross income calculations. You can avoid this mistake by listing every tax-exempt bond payment in the correct area of the form.
- Ignoring backup withholding: Backup withholding can appear when identification information is incorrect, and taxpayers overlook these withheld amounts. You can avoid issues by confirming that the federal income tax withheld is entered correctly as a credit on your tax return.
- Not adjusting for bond premium: Bond premium affects the net amount of interest income, and taxpayers sometimes forget to reduce interest earned accordingly. You can avoid misreporting by applying the correct bond premium adjustment shown on the IRS form.
- Using one form for multiple accounts: Some taxpayers combine amounts from various accounts instead of using separate forms as required. You can avoid discrepancies by filing each Form 1099-INT separately and reporting each amount exactly as shown.
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 interest income reported on your tax return with the amounts paid by each financial institution. If the amounts match, processing continues normally. If differences are found, the agency contacts you via postal mail and requests clarification. Taxpayers who include all interest earned, foreign tax, and federal income tax withheld usually avoid issues.
FAQs
How do I handle Form 1099-INT 2013 information when preparing my federal income tax return?
You enter taxable interest, tax-exempt interest, and federal income tax withheld exactly as reported on the form. Keep all documents to support your entries.
How does foreign tax affect my filing when interest income is reported on Form 1099-INT?
Foreign tax appears on the form when applicable, and you may claim a credit or deduction on your return. Review IRS instructions for detailed rules.
Does a tax-exempt bond still need to be reported on my tax return?
Yes, you include tax-exempt interest on your return even though you do not pay federal income tax on that income.
How do I use the federal income tax withheld from Form 1099-INT when filing my tax return?
The federal income tax withheld is reported as a credit on your tax return. Enter the amount exactly as shown to reduce the tax you owe.
Why does my 1099-INT show both treasury obligations and bonds?
Interest from treasury obligations, treasury notes, or treasury bills receives special tax treatment and must be reported separately from interest on private activity bonds.
What happens when a market discount appears on my 1099-INT interest income?
Market discount affects how much taxable interest income you must report. IRS rules determine whether the discount increases your income tax.
Do early withdrawal penalties reported on Form 1099-INT affect the amount I pay income tax on?
Yes, early withdrawal penalties reduce taxable interest income, and you may deduct them on your federal income tax return.
