2018 Form 1099-INT Checklist
Purpose
Form 1099-INT reports interest income paid during 2018, including taxable interest, U.S. Treasury and Savings Bond interest, early withdrawal penalties, and tax-exempt interest. For covered securities, brokers must report bond premium amortization and market discount accruals in accordance with specific election and notification requirements.
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 generate credit allowances, treated as interest income, on designated dates (March 15, June 15, September 15, and December 15). Recipients must report these credits on Form 8912.
Recipient Steps
Step 1: Verify Interest Income and Bond Credits
Confirm that Box 1 interest matches your account statements from the payer. If you received credits from clean renewable energy bonds or Build America bonds during 2018, verify that Box 1 includes those credit allowance amounts that should also appear on your Form 8912.
Step 2: Review Covered Securities and Premium Amortization Elections
Identify whether any securities are covered securities acquired at a premium. If you notified your payer in writing under Regulations section 1.6045-1 that you did not want to amortize bond premium under Section 171, verify that Box 1 shows gross interest only without premium amortization adjustments.
Step 3: Claim Early Withdrawal Penalty Deduction
Review Box 2 for any early withdrawal penalty amount. This penalty is deductible as an adjustment to income on your 2018 Form 1040. Consult the Instructions for Form 1040 to claim this above-the-line deduction properly.
Step 4: Report U.S. Savings Bonds and Treasury Interest
Examine Box 3 for U.S. Savings Bonds and Treasury obligations interest. Consult Publication 550 to determine reporting requirements on Schedule B. This interest is exempt from state and local income taxes but must be reported for federal purposes.
Step 5: Report Backup Withholding
If Box 4 shows backup withholding, include this amount as federal income tax withheld on your 2018 Form 1040. The 2018 backup withholding rate is 24 percent, as per the Tax Cuts and Jobs Act.
Step 6: Reconcile Bond Premium on Taxable Securities
For taxable covered securities acquired at a premium, reconcile Box 11 bond premium amortization against Box 1 interest. If Box 11 exceeds the interest payment, the excess may be treated as a bond premium deduction under Section 171, subject to the limitations in Regulations Section 1.171-2—report as per the Schedule B instructions.
Step 7: Reconcile Premium on U.S. Treasury Obligations
For U.S. Treasury obligations acquired at a premium, reconcile Box 12 premium amortization against Box 3 interest using the same principles as taxable securities. Follow Publication 550 guidance for proper reporting.
Step 8: Report Tax-Exempt Interest
If Box 8 shows tax-exempt interest, report this amount on Form 1040 Line 2a for informational purposes. Tax-exempt interest is not included in your taxable income or adjusted gross income. If Box 9 shows specified private activity bond interest subject to Alternative Minimum Tax, report this amount on Form 6251 if you are required to file that form.
Step 9: Review Market Discount Accruals
For covered securities with a market discount acquired on or after January 1, 2015, verify that the Box 10 market discount was calculated using the constant yield method under Section 1276(b) unless you notified your payer in writing that you had elected the ratable accrual method. Report the accrued market discount per the Form 1040 instructions and Publication 550.
Step 10: Handle Tax-Exempt Bond Premium
Review Box 13 for tax-exempt covered security premium amortization. If this amount exceeds the tax-exempt interest paid in Box 8, the excess is a nondeductible loss under Regulations section 1.171-2(a)(4)(ii). Reduce your Box 8 amount by Box 13 when reporting on Form 1040, Line 2a, but do not go below zero. Consult Publication 550 for detailed guidance.
Step 11: Fulfill Nominee Reporting Obligations
If you received Forms 1099-INT as a nominee for another person, prepare separate Forms 1099-INT for each beneficial owner showing their allocable income. File Copy A with the IRS and furnish Copy B to each owner by the required deadline. Spouses are exempt from reporting requirements as nominees.
Step 12: Complete Tax Return Reporting
Report all interest amounts on your 2018 Form 1040 Schedule B (Interest and Ordinary Dividends) if required. Ensure amounts also appear on applicable state tax returns if your state requires interest income reporting. Verify that taxable interest from Box 1 (reduced by Box 2 if applicable) flows to the appropriate line on your federal return.
Year-Specific 2018 Reporting Rules
Covered Securities Election Requirements
Under Regulations section 1.6045-1(n)(5), covered securities rules require written notification to your payer if you elect not to amortize bond premium under Section 171 on taxable covered securities.
For market discount on covered securities acquired on or after January 1, 2015, brokers presume you elect the constant yield method under Section 1276(b)(2) unless you notify them in writing that you choose the ratable accrual method. Payers report amounts in Boxes 1, 3, 8, 9, 10, 11, 12, and 13 based on these elections.
Tax Credit Bond Reporting
Credit allowances 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 are treated as interest paid on credit allowance dates. These dates are March 15, June 15, September 15, December 15, and the last day the bond is outstanding. Amounts must be included in Box 1 as interest income. Recipients calculate and report the actual credit on Form 8912.
FATCA Filing Requirements
If the FATCA filing requirement checkbox is marked on your Form 1099-INT, the payer is reporting to satisfy chapter 4 account reporting obligations. Recipients may have additional filing requirements as outlined in the Instructions for Form 8938 (Statement of Specified Foreign Financial Assets). Review those instructions to determine if you must file Form 8938 with your tax return.
Backup Withholding Application
Backup withholding rules apply to all interest payments, including tax-exempt interest, in Box 8 if you failed to provide a valid taxpayer identification number or the IRS notified the payer that your TIN is incorrect. Any backup withholding amount appears in Box 4 and should be claimed as federal income tax withheld on your 2018 Form 1040 to receive credit for taxes already paid.
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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.
