Form 1099-INT: Interest Income (2017) – A Taxpayer’s Guide

What the Form Is For

Form 1099-INT is an information return used to report interest income you received during the calendar year. If you earned interest from banks, credit unions, savings accounts, bonds, or certain other investments, you'll receive this form from the financial institution or entity that paid you the interest.

Think of Form 1099-INT as a receipt showing how much interest income you earned. The IRS requires payers—such as banks, brokerage firms, and other financial institutions—to send you this form if they paid you at least $10 in interest during 2017. The payer also sends a copy to the IRS, so the government knows about your interest income.

The form reports several types of interest:

Regular taxable interest (like from savings accounts)
Tax-exempt interest (such as from certain municipal bonds)
Interest on U.S. Treasury obligations
Early withdrawal penalties
Foreign taxes paid on interest

You'll use the information from this form when preparing your tax return to report all interest income and claim any applicable deductions or credits. (Source: IRS.gov)

As a recipient, you don't file Form 1099-INT with your tax return—instead, you use the amounts shown on it to complete the appropriate lines of your Form 1040 and, if necessary, Schedule B.

When You’d Use It (Late/Amended Filings)

For the 2017 tax year, you should have received your Form 1099-INT from payers by January 31, 2018.

If you're a payer (the person or institution paying interest), you must file the form with the IRS by February 28, 2018 (paper filing) or March 31, 2018 (electronic filing).

Late or Missing Forms

If you didn't receive your Form 1099-INT by mid-February, contact the payer immediately. You're still required to report all interest income on your tax return, even if you never receive the form. You can estimate the amount based on your records, but it's best to get the official form to ensure accuracy.

Amended Returns

If you discover an error on your Form 1099-INT after you've already filed your tax return, the payer should issue a corrected form. You'll receive a new Form 1099-INT marked “CORRECTED” at the top.

If the correction changes your tax liability, you must file an amended tax return using Form 1040X. (Source: IRS.gov)

Payers can request an automatic 30-day extension to file by submitting Form 8809, and under hardship conditions, may apply for an additional 30-day extension.

Recipients who need to furnish corrected statements to others (such as nominees redistributing interest) should follow similar procedures.

Key Rules for 2017

$10 Threshold

Payers must issue Form 1099-INT if they paid you $10 or more in interest during the year.

However, there's an exception: if you received $600 or more in interest from sources not typically required to report (such as interest on delayed death benefits or tax refunds), the payer must report those amounts as well.

Exempt Recipients

Not everyone receives a 1099-INT. Corporations, tax-exempt organizations, IRAs, HSAs, government agencies, and certain other entities are exempt.

If you're an individual with a personal account, you’ll receive the form. (Source: IRS.gov)

Backup Withholding

If you failed to provide your correct taxpayer identification number (TIN) or Social Security number to the payer, they may have withheld 28% of your interest income for federal taxes.

This backup withholding will be reported in Box 4 of your Form 1099-INT, and you can claim it as a credit on your tax return.

Tax-Exempt vs. Taxable Interest

Not all interest is taxed the same way:

Municipal bond interest (Box 8): Exempt from federal tax, may trigger AMT if from private activity bonds (Box 9).
U.S. Treasury interest (Box 3): Taxable federally, often exempt from state/local tax.

Electronic Filing Requirement

If you're a payer filing 250 or more Form 1099-INT returns, you must file electronically. (Source: IRS.gov)

Step-by-Step Guide (High Level)

Step 1: Receive the Form

By January 31, 2018, you should receive Form 1099-INT from each institution that paid you $10 or more in interest during 2017. Check your mail and online account portals.

Step 2: Review for Accuracy

Carefully examine each box:

Box 1: Taxable interest
Box 3: U.S. Savings Bond and Treasury interest
Box 8: Tax-exempt interest

Verify the amounts match your records.

Step 3: Gather All Forms

If you have multiple accounts, collect all your Forms 1099-INT before preparing your tax return.

Step 4: Report on Your Tax Return

When filing Form 1040, report the total taxable interest from Box 1 of all your Forms 1099-INT on Line 8a.

If your total taxable interest exceeds $1,500, also complete Schedule B and list each payer separately.

Step 5: Handle Special Situations

Early withdrawal penalty (Box 2): Deduct on Line 30 of Form 1040
Backup withholding (Box 4): Report on Line 64 of Form 1040
Tax-exempt interest (Box 8): Report on Line 8b of Form 1040 (not taxed)

Step 6: Keep Records

Retain all Forms 1099-INT for at least three years. (Source: IRS.gov)

Common Mistakes and How to Avoid Them

Mistake #1: Forgetting to Report All Interest

Many taxpayers forget small accounts or assume under-$10 interest need not be reported.

Solution: Always report all interest income.

Mistake #2: Confusing Tax-Exempt and Taxable Interest

Some people think tax-exempt interest doesn’t need to be reported.

Solution: Report tax-exempt interest on Line 8b of Form 1040—it affects other calculations like Social Security benefit taxation.

Mistake #3: Entering Incorrect Taxpayer Identification Numbers

Providing an incorrect TIN triggers backup withholding and IRS notices.

Solution: Always verify your TIN when opening or maintaining accounts.

Mistake #4: Missing the Early Withdrawal Penalty Deduction

Many overlook this deduction.

Solution: Claim the Box 2 penalty on Line 30 of Form 1040. (Source: IRS.gov)

Mistake #5: Filing for Exempt Recipients

Payers sometimes mistakenly issue 1099-INTs to exempt entities.

Solution: Verify the recipient type before issuing forms.

Mistake #6: Not Filing Electronically When Required

Payers filing 250+ forms must file electronically.

Solution: Use the FIRE system or an approved e-filing service.

What Happens After You File

For Recipients (Individuals)

The IRS matches your reported interest with what payers submitted.

If there's a mismatch, you may receive a CP2000 notice proposing additional tax or penalties.

For Payers

The IRS matches recipient TINs against filed returns.

If errors occur, payers may receive CP2100/CP2100A notices requesting correction.

Payers must retain copies of all forms for three years (or four years if backup withholding was involved). (Source: IRS.gov)

Penalties

The IRS enforces strict penalties for incorrect or late filings:

$50/return if corrected within 30 days
$100/return if corrected by August 1
$260/return if filed after August 1 or not at all

Intentional disregard results in $530 per return with no maximum.

Recipients who fail to report interest may face a 20% accuracy-related penalty plus interest on unpaid taxes.

Frequently Asked Questions (FAQs)

Q1: Do I need to attach Form 1099-INT to my tax return when I file?

No. You don’t attach Forms 1099-INT to your return, but keep them for at least three years. Use the amounts to complete your return accurately.

Q2: I received a Form 1099-INT with a small amount—like $15. Do I really need to report it?

Yes. All interest income must be reported. The IRS receives copies of all Forms 1099-INT and matches them to your return.

Q3: What’s the difference between Box 1 and Box 3 interest?

Box 1: Regular taxable interest
Box 3: U.S. Savings Bonds and Treasury interest

Both are federally taxable, but Treasury interest is often exempt from state/local taxes. (Source: IRS.gov)

Q4: My Form 1099-INT shows backup withholding in Box 4. What does this mean?

It means 28% of your interest was withheld due to an incorrect or missing TIN.

You can claim this withheld amount as a credit on Line 64 of Form 1040.

Q5: I received Form 1099-INT for an account I share with someone else. What do I do?

If you’re a nominee, file a new Form 1099-INT showing the other person’s share. Report only your share on your own tax return.

Q6: Can I get an extension to file Form 1099-INT if I’m the payer?

Yes. File Form 8809 by the original due date for a 30-day automatic extension. Under hardship, an additional 30-day extension may be available. (Source: IRS.gov)

Q7: What if my Form 1099-INT has an error?

Contact the payer immediately for a corrected form marked “CORRECTED.”

If you’ve already filed, submit Form 1040X to amend your return after receiving the correction.

For More Information

Visit the IRS Forms and Publications page to access:

Form 1099-INT instructions
Publication 550 (Investment Income and Expenses)
Other resources and updates.

You can also call the IRS at 1-800-829-1040 with specific questions about your situation.

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