Form 1099-INT 2017 Filing Checklist
Purpose
Form 1099-INT reports taxable and tax-exempt interest income paid during calendar year 2017. Payers must furnish Copy B to recipients by January 31, 2018, and file Copy A with the IRS by February 28, 2018, for paper filing or April 2, 2018, for electronic filing. The 2017 instructions require specific reporting of bond premium amortization, market discount elections, and covered security premium calculations under Regulation Section 1.6045-1 for securities acquired in prior years and still held as of the end of 2017.
Filing Steps
Step 1: Verify Taxpayer Identification Numbers
Confirm that both the payer’s federal identification number (EIN or SSN) and the recipient’s TIN (SSN, ITIN, ATIN, or EIN) match IRS records. When providing copies to recipients, display only the last four digits of their identification number for security purposes.
Step 2: Report Interest Income in Box 1
Enter the total amount of taxable interest paid during calendar year 2017 in Box 1, excluding the amounts reported in Box 3. Include all interest payments of $10 or more made in the course of your trade or business. For qualified tax credit bonds, include credit amounts treated as paid on the credit allowance dates: March 15, June 15, September 15, and December 15, 2017.
Step 3: Complete Box 2 for Early Withdrawal Penalties
Report any interest or principal forfeited by the recipient due to early withdrawal from certificates of deposit or other time deposits. Recipients may deduct this amount from their gross income on Form 1040. Do not reduce the Box 1 amount by the penalty amount.
Step 4: Separate U.S. Obligations Interest in Box 3
Enter interest from U.S. Savings Bonds, Treasury bills, Treasury notes, and Treasury bonds in Box 3. This interest is exempt from state and local income taxes and must not be included in Box 1. Report this amount separately to ensure proper tax treatment.
Step 5: Report Federal Income Tax Withheld in Box 4
Enter any federal income tax withheld under backup withholding rules in Box 4. Backup withholding applies when a recipient fails to provide a correct TIN, provides an incorrect TIN, or has been notified by the IRS of underreporting. The backup withholding rate for 2017 is 28 percent.
Step 6: List Investment Expenses in Box 5
Report investment expenses only if the recipient holds a share in a single-class REMIC. Include the recipient’s proportionate share of deductible investment expenses. This amount should already be included in the Box 1 total for single-class REMICs.
Step 7: Report Foreign Taxes in Boxes 6 and 7
Enter any foreign tax paid on interest in Box 6, reported in U.S. dollars. List the corresponding foreign country or U.S. possession name in Box 7. Recipients may claim either a deduction or a credit for these foreign taxes on their Form 1040.
Step 8: Complete Tax-Exempt Interest Reporting
Report tax-exempt interest of $10 or more in Box 8. This includes interest from state and local government obligations. Report Box 9 as a subset of Box 8 for specified private activity bond interest, which may be subject to the alternative minimum tax. Recipients must report Box 8 amounts on Form 1040 line 8b even though the interest is not taxable.
Step 9: Report Market Discount for Covered Securities
Complete Box 10 only if the recipient elected under section 1278(b) to include market discount accrual and notified the payer in writing per Regulations section 1.6045-1. For covered securities acquired on or after January 1, 2015, use the constant yield method unless the recipient provided written notification otherwise.
Step 10: Report Bond Premium Amortization
Complete Box 11 for taxable covered securities and Box 12 for U.S. Treasury covered securities, showing bond premium amortization under section 171. Report amortization unless the recipient notified the payer in writing not to amortize the premium. You may report either net interest amounts or gross amounts for both interest and premium.
Step 11: Complete Box 13 for Tax-Exempt Securities
Report bond premium amortization for tax-exempt covered securities in Box 13. If you reported net interest in Box 8 or Box 9 by offsetting the premium amortization, leave Box 13 blank to avoid duplicate reporting.
Step 12: Furnish Recipient Copies by Deadline
Provide Copy B to each recipient by January 31, 2018. The statement must include all information reported to the IRS. You may truncate the recipient’s TIN to show only the last four digits on Copy B, but you must report the full TIN on Copy A filed with the IRS.
Step 13: File Copy A with the IRS
Submit Copy A to the IRS by February 28, 2018, if filing on paper, or April 2, 2018, if filing electronically. Paper forms must meet IRS specifications as outlined in Publication 1220. Do not submit forms printed from the IRS website unless they are the official red-ink scannable forms or you qualify for the online fillable form exception.
Step 14: Include Required FATCA Information
Check the FATCA filing requirement box if you are reporting on Form 1099-INT to satisfy chapter 4 account reporting requirements as a U.S. payer or foreign financial institution. Include the recipient’s account number when filing with FATCA reporting, as the account number is required for these filings.
Step 15: Complete Nominee Reporting if Applicable
If amounts reported on your Form 1099-INT belong to other persons, prepare separate Forms 1099-INT for each beneficial owner. File these nominee returns with the IRS, listing yourself as the payer and each beneficial owner as the recipient. Provide Copy B to each beneficial owner. Spouses are exempt from filing nominee returns for amounts belonging to each other.
Year-Specific Regulatory Updates for 2017
- Covered Security Premium Reporting: Payers may report either net interest amounts, which reflect the offset of interest payments by premium amortization, or gross amounts showing both the interest payment and the bond premium amortization separately for taxable covered securities. This flexibility applies only when the recipient has not notified the payer in writing, as specified in Section 1.6045-1 of the regulation, to omit amortization.
- Market Discount Constant Yield Method: For covered securities acquired on or after January 1, 2015, and still held during 2017, market discount accrual must be calculated using the constant yield basis if the recipient did not notify the payer in writing under Regulations section 1.6045-1 that they made the election.
- FATCA Filing Requirements: Payors must indicate if they are filing Form 1099-INT to satisfy chapter 4 account reporting requirements. Recipients who receive interest from foreign accounts may also have filing obligations under Form 8938 for specified foreign financial assets.
- Nominee Reporting Rules: When a form includes amounts belonging to other persons, the filer must complete separate Forms 1099-INT for each beneficial owner, file Copy A with the IRS using the filer’s information as the payer, and furnish Copy B to each beneficial owner. Married couples are exempt from nominee reporting requirements for amounts held in their spouse's name.
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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.
