Form 1099-INT 2016: Complete Filing Checklist
Purpose of Form 1099-INT 2016
Form 1099-INT reports taxable and tax-exempt interest income paid during the 2016 calendar year. Payers must file Copy A with the IRS by February 28, 2017, for paper filing, or March 31, 2017, if filing electronically. Recipient copies (Copy B) must be furnished by January 31, 2017.
The 2016 form includes important updates to bond premium reporting. Box 12 was newly added to Form 1099-INT specifically for reporting bond premium on U.S. Treasury obligations, expanding the existing premium amortization reporting structure for covered securities under Regulation section 1.6045-1(n)(5).
Who Must File Form 1099-INT
You must file Form 1099-INT if you paid any person amounts reportable in boxes 1, 3, or 8 of at least $10 (or at least $600 of interest paid in the course of your trade or business), paid foreign tax on interest that you withheld, or withheld and did not refund any federal income tax under backup withholding rules regardless of payment amount.
Report only interest payments made during your trade or business activities, including those to federal, state, and local government agencies. You are not required to file for exempt recipients such as corporations, tax-exempt organizations, individual retirement arrangements, or registered securities dealers.
Completion and Reporting Steps
Step 1: Verify Identification Numbers
Obtain the payer’s complete federal identification number and the recipient’s Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), Adoption Taxpayer Identification Number (ATIN), or Employer Identification Number (EIN). Verify identification numbers against IRS records. The 2016 form displays only the last four digits on recipient copies for security purposes, but you must transmit the full number to the IRS.
Step 2: Report Taxable Interest in Box 1
Report all taxable interest income of $10 or more paid during calendar year 2016 in Box 1. Include interest on bank deposits, accumulated dividends from life insurance companies, and interest on indebtedness such as bonds, debentures, and notes (excluding U.S. Treasury obligations).
Also report interest of $600 or more paid in the course of your trade or business, such as interest on delayed death benefits or interest on state or federal income tax refunds.
Include tax credits allowed from clean renewable energy bonds, new clean renewable energy bonds, qualified energy conservation bonds, qualified zone academy bonds, qualified school construction bonds, and Build America bonds. These credits are treated as paid on the credit allowance dates of March 15, June 15, September 15, and December 15 of 2016.
Do not include interest on U.S. Savings Bonds and Treasury obligations in Box 1, as these belong in Box 3.
Step 3: Report Early Withdrawal Penalties in Box 2
Enter interest or principal forfeited due to early withdrawal of time deposits in Box 2. This amount is deductible by recipients as an adjustment to gross income on their 2016 Form 1040. Do not reduce the Box 1 amount by the forfeiture amount.
Step 4: Report U.S. Government Interest Separately in Box 3
Report interest on U.S. Savings Bonds, Treasury bills, Treasury bonds, and Treasury notes separately in Box 3. This interest is exempt from state and local income taxes and must not be duplicated in Box 1.
If you make a payment on a U.S. obligation on which interest is reportable, enter your name, address, and federal identification number on the forms, not those of the U.S. Treasury Department.
Step 5: Report Backup Withholding in Box 4
Enter backup withholding if the recipient failed to furnish a taxpayer identification number or furnished an incorrect TIN. The backup withholding rate for 2016 is 28 percent. This rate applies to amounts in boxes 1, 3, and 8. The recipient must include this withheld amount on their 2016 income tax return as tax withheld.
Step 6: Report Investment Expenses in Box 5
For single-class REMICs only, enter the regular interest holder’s proportionate share of investment expenses. These expenses are subject to the 2 percent limitation for Schedule A deductions on Form 1040 for the 2016 tax year.
Step 7: Report Foreign Tax and Country Information
If applicable, enter any foreign tax paid on interest in Box 6 (in U.S. dollars) and the name of the foreign country or U.S. possession in Box 7.
Step 8: Report Tax-Exempt Interest in Box 8
Enter tax-exempt interest of $10 or more that is credited or paid if the interest finances government operations and is issued by a state, the District of Columbia, a U.S. possession, an Indian tribal government, or their political subdivisions. Include any specified private activity bond interest in both Box 8 and Box 9.
Step 9: Report Specified Private Activity Bond Interest in Box 9
Enter interest of $10 or more from specified private activity bonds, which generally means any private activity bond issued after August 7, 1986. This amount must also be included in the total for Box 8.
Step 10: Report Market Discount in Box 10
For taxable or tax-exempt covered securities acquired with a market discount, if the taxpayer notified you that a section 1278(b) election was made, enter the amount of market discount that accrued during 2016 in amounts of $10 or more. Recipients must have made a written election under section 1278(b) to include accrual in income and notified the payer in writing.
Step 11: Report Bond Premium Amortization in Boxes 11–13
For covered securities acquired at a premium, report bond premium amortization allocable to interest payments in the appropriate box:
Box 11 (Bond Premium): For taxable covered securities other than U.S. Treasury obligations, enter the bond premium amortization amount unless you were notified in writing that the holder did not want to amortize the bond premium under section 171.
Box 12 (Bond Premium on U.S. Treasury Obligations): For U.S. Treasury obligations that are covered securities, enter the bond premium amortization amount unless you were notified in writing that the holder did not want to amortize bond premium under section 171.
Box 13 (Bond Premium on Tax-Exempt Bond): For tax-exempt covered securities acquired at a premium, enter the bond premium amortization amount.
You may report either a net amount of interest (interest minus amortization) in the interest income boxes or gross amounts for both interest and amortization. If you report net interest in Box 1, 3, 8, or 9, leave the corresponding premium box blank. For noncovered securities acquired at a premium, report only the gross amount of interest paid.
Step 12: Enter CUSIP Numbers in Box 14
Report CUSIP numbers for tax-exempt bonds on which tax-exempt interest was paid or tax credit bonds on which taxable interest or credits were allowed during 2016. If no CUSIP number was issued, leave blank. For single bonds, enter the specific CUSIP number. For multiple bonds or accounts, enter “various.”
Step 13: Complete State Tax Information
If applicable, complete state tax withholding boxes 15–17. Enter the abbreviated state name in Box 15, the payer’s state identification number in Box 16, and the state tax withheld in Box 17 for each state requiring separate reporting.
Step 14: Prepare Nominee Returns
If the form includes amounts belonging to other persons, prepare nominee returns. File Copy A of Form 1099-INT for each additional owner with Form 1096, listing yourself as the payer and other owners as recipients.
Step 15: Check FATCA Filing Requirements
Check the FATCA filing requirement box if you are reporting to satisfy Chapter 4 account reporting requirements. Recipients may have filing requirements outlined in the Form 8938 instructions.
Filing Deadlines and Procedures
File Copy A with the IRS on or before February 28, 2017, for paper filing or March 31, 2017, for electronic filing. Furnish Copy B to recipients by January 31, 2017. Do not print forms from the IRS website, as scanned forms will not process. Use Form 1096, Annual Summary and Transmittal of U.S. Information Returns, when submitting paper forms to the IRS.
Special Reporting Situations
Nonresident Aliens
If you pay U.S. bank deposit interest of at least $10 to certain nonresident alien individuals, report the interest on Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. Comply with withholding obligations under Publication 515 for 2016, which are distinct from domestic recipient reporting requirements.
Widely Held Fixed Investment Trusts
Trustees and middlemen must report the gross amount of interest attributable to trust interest holders for the calendar year on Form 1099-INT if that amount exceeds $10. Furnish the required tax information statement to trust interest holders by March 15.
REMICs, FASITs, and CDOs
Single-class REMICs must report the regular interest holder’s proportionate share of investment expenses in Box 5. These expenses are subject to the 2 percent limitation for Schedule A deductions on Form 1040 for the 2016 tax year.
Furnish statements to holders by March 15 containing the information shown on Form 1099-INT plus additional information specified in Regulations section 1.6049-7(f)(2)(i).
Important Reminders for 2016
The 2016 form introduced Box 12 specifically for reporting bond premium on U.S. Treasury obligations, distinguishing these from other taxable bonds (Box 11) and tax-exempt bonds (Box 13). This change reflects the expanded covered security reporting requirements under Regulation Section 1.6045-1 for bonds held in 2016.
For taxable bonds and Treasury obligations, you must report bond premium amortization if the holder elected to amortize bond premium under section 171 and did not notify you in writing. You may choose to report either net interest amounts or gross amounts for both interest and amortization.
Interest excluded from reporting includes interest on obligations issued by individuals, interest from sources outside the United States paid outside the United States by non-U.S. payers, certain portfolio interest, and payments made to foreign beneficial owners. Tax-deferred interest, such as interest earned but not distributed from an IRA, should not be reported.
By following this checklist and adhering to the 2016 instructions, you will ensure accurate and compliant Form 1099-INT reporting for the 2016 tax year.
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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.
