Form 1099-INT 2020 Filing Checklist
Purpose
Form 1099-INT reports taxable interest income, tax-exempt interest, bond premium adjustments, and market discount accrual for the calendar year 2020. This form implements 2020 guidance on covered securities reporting under Regulation Section 1.6045-1(n)(5), including payer notification requirements for premium amortization elections and constant yield market discount calculations for securities acquired on or after January 1, 2015.
Filing Requirements and Deadlines
Form 1099-INT must be filed for each person to whom you paid at least $10 in interest (or at least $600 of interest paid in the course of your trade or business), for whom you withheld and paid any foreign tax on interest, or from whom you withheld any federal income tax under backup withholding rules, regardless of the payment amount. Report only interest payments made in the course of your trade or business.
Key Deadlines for Tax Year 2020:
- Furnish Copy B to recipients by February 1, 2021
- File Copy A with the IRS by March 1, 2021 (paper filing)
- File Copy A with the IRS by March 31, 2021 (electronic filing)
Step-by-Step Filing Checklist
Step 1: Verify Taxpayer Identification Numbers
Confirm the payer TIN matches IRS records, and verify the recipient’s TIN (SSN, ITIN, ATIN, or EIN) is complete and accurate before furnishing copies. Payers may truncate the TIN display to the last four digits on recipient copies only (Copies B, C, 1, and 2) while maintaining the full TIN on Copy A filed with the IRS. Never truncate the payer’s TIN on any form.
Step 2: Report Taxable Interest Income in Box 1
Enter all taxable interest income in Box 1, excluding U.S. Savings Bonds and Treasury obligations. Report interest of $10 or more paid or credited to accounts by banks, credit unions, savings associations, life insurance companies, and similar organizations. Include interest on bank deposits, accumulated dividends from life insurance, and interest on registered debt instruments.
For taxable covered securities acquired at a premium, report net interest reflecting the premium offset unless the recipient provided written notification declining premium amortization under Regulation 1.6045-1(n)(5).
Step 3: Enter Early Withdrawal Penalties in Box 2
Report interest or principal forfeited due to early withdrawal of time deposits, such as certificates of deposit. Do not reduce the Box 1 amount by this penalty. Recipients deduct this amount as an adjustment to gross income on Form 1040 or Form 1040-SR, not as an itemized deduction. This penalty is fully deductible even if it exceeds the interest income received.
Step 4: Report U.S. Government Interest in Box 3
Enter interest on U.S. Savings Bonds, Treasury bills, Treasury notes, and Treasury bonds in Box 3 only. Do not include these amounts in Box 1. This interest is exempt from state and local income tax but remains subject to federal income tax. For taxable covered securities acquired at a premium, see Box 12 instructions for bond premium reporting.
Step 5: Enter Federal Backup Withholding in Box 4
Record federal backup withholding at the 24% rate if the recipient failed to provide a correct TIN or was subject to backup withholding under IRS notification. Report backup withholding on payments required in Boxes 1, 3, and 8. Recipients claim this withholding as a credit against their federal tax liability on their tax return.
Step 6: Report Bond Premium Amortization for Taxable Securities
For taxable covered securities acquired at a premium (excluding U.S. Treasury obligations), report the bond premium amortization amount in Box 11 unless the recipient provided written notification electing not to amortize the bond premium under section 171. If you reported net interest in Box 1 (interest minus premium), leave Box 11 blank for noncovered securities acquired with a premium; report only the gross interest amount.
Step 7: Report Bond Premium for U.S. Treasury Obligations
For U.S. Treasury obligations that are covered securities acquired at a premium, enter the bond premium amortization allocable to interest paid during the tax year in Box 12, unless written notification was received declining amortization. If you reported net interest in Box 3, leave Box 12 blank. Follow the same netting rules as other taxable securities.
Step 8: Report Tax-Exempt Bond Premium in Box 13
For tax-exempt covered securities acquired at a premium, enter the bond premium amortization allocable to interest paid during the year in Box 13. If you reported net tax-exempt interest in Box 8 or Box 9, leave Box 13 blank. Bond premium on tax-exempt bonds reduces the amount of tax-exempt interest but does not create a deduction.
Step 9: Report Accrued Market Discount in Box 10
For covered securities acquired with a market discount where the recipient provided written notice of a section 1278(b) election to accrue market discount, report the accrued market discount of $10 or more using the constant yield method required under section 1276(b)(2). Unless the recipient notified you of declining the section 1276(b) election, use the constant yield method for all covered securities. Market discount on tax-exempt securities is taxable as ordinary interest income.
Step 10: Furnish Recipient Statements by Deadline
Provide Copy B to each recipient by February 1, 2021. If you furnished multiple Forms 1099-INT throughout the year for window transactions, do not duplicate those amounts on the annual statement. You may provide statements electronically if the recipient consents. Use official IRS forms or acceptable substitute statements that include all required information and the official IRS legend.
Step 11: File with IRS Using Appropriate Method
File Copy A with the IRS by March 1, 2021, for paper filing or March 31, 2021, for electronic filing. Do not file forms printed from the IRS website, as they are not scannable by IRS processing equipment. Order official forms from the IRS or use IRS-approved software that meets Publication 1220 specifications. Filers of 250 or more forms are required to file electronically.
Step 12: Prepare Form 1096 Transmittal for Paper Filing
Attach Form 1096 (Annual Summary and Transmittal of U.S. Information Returns) when filing paper forms with the IRS. Report total interest income, federal withholding, and tax-exempt interest across all Forms 1099-INT filed. File separate Forms 1096 for different form types. Reconcile Box 1 totals to payer accounting records. Form 1096 is not required for electronic filing.
Step 13: Handle Nonresident Alien Recipients Properly
Do not file Form 1099-INT for nonresident alien individuals receiving U.S. bank deposit interest or portfolio interest exempt under tax law. For nonresident aliens receiving taxable U.S.-source interest subject to withholding, file Form 1042-S (Foreign Person’s U.S. Source Income Subject to Withholding) instead of Form 1099-INT. Refer to Publication 515 for withholding requirements and reporting rules for foreign persons.
Step 14: Distinguish Between Form 1098 and Form 1099-INT
Report mortgage interest received in the course of your trade or business on Form 1098 (Mortgage Interest Statement), not Form 1099-INT. Form 1098 is issued to the mortgage payer (borrower) and reports interest paid by them. Form 1099-INT reports interest income paid to the recipient. Verify the correct form type based on whether you are reporting interest paid or interest received.
Step 15: Complete State Reporting Requirements
Enter state tax information in Boxes 15–17 if required by state law or if participating in the Combined Federal/State Filing Program. Include the state abbreviation (Box 15), payer’s state identification number (Box 16), and state income tax withheld (Box 17). Furnish Copy 2 to the appropriate state tax department when mandatory under state regulations.
2020 Year-Specific Updates
Covered Securities Market Discount
Covered securities with accrued market discount (Box 10) acquired on or after January 1, 2015, must be calculated using the constant yield method unless the recipient filed a written election to decline under Regulation 1.6045-1(n)(5). The 2020 instructions reaffirm that this post-2014 requirement applies to all 2020 reporting periods.
Bond Premium Amortization Reporting
Bond premium amortization reporting (Boxes 11, 12, 13) depends on written recipient notification filed before the end of the year, as specified in Regulation 1.6045-1(n)(5). Without a written election declining amortization, payers must report either net interest (interest offset by premium) or gross amounts for both interest and premium. This dual-path reporting continues from prior years with 2020 instruction clarifications.
Early Withdrawal Penalty Treatment
Early withdrawal penalties reported in Box 2 are deductible as an adjustment to gross income on Form 1040 or Form 1040-SR. The Tax Cuts and Jobs Act did not alter this above-the-line deduction treatment for 2020, distinguishing it from suspended miscellaneous itemized deductions.
FATCA Filing Requirement Indicator
The FATCA filing requirement checkbox indicates that the payer has filed under the Chapter 4 account reporting requirements. The 2020 instructions cross-reference Form 8938 filing requirements for recipients with foreign account holdings that meet FATCA thresholds established under Section 1471.
Backup Withholding Rate
The backup withholding rate for 2020 remains 24%, applicable to reportable interest payments when recipients fail to provide correct TINs or are subject to backup withholding under IRS notification. This rate applies to amounts in Boxes 1, 3, and 8 but is limited to actual cash payments.
Important Reminders
Paper forms printed from the IRS website cannot be filed with the IRS because they lack the scannable red ink required for optical character recognition processing. Order official forms from the IRS or file electronically using compliant software. Nominees and intermediaries must file separate Forms 1099-INT for other beneficial owners and submit Copy A with the appropriate Form 1096 transmittal. Maintain adequate documentation supporting all reported amounts for IRS examination purposes.
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This checklist is for educational purposes only and does not constitute tax or legal advice. Always review official IRS instructions and consult a qualified professional for guidance.
