What Form 1099-INT (2021) Is For
IRS Form 1099-INT (2021) is an information return issued by banks, credit unions, and other financial institutions to report interest income paid to individuals or entities. For 2021, this form is required if an account earned ten dollars or more in interest or if any amount of federal income tax was withheld under backup withholding rules.
The Internal Revenue Service uses the form to verify that taxpayers accurately report all interest income on their federal income tax returns. Interest income can come from savings accounts, certificates of deposit, Treasury bonds, savings bonds, or municipal bonds. Payers must furnish the form to recipients by January 31, 2022, and file a copy with the IRS by February 28 if submitting by paper, or by March 31 if filing electronically.
When You’d Use Form 1099-INT
A taxpayer receives Form 1099-INT when a bank, credit union, or other financial institution pays at least ten dollars in interest income during the year. The form reports amounts earned from savings accounts, certificates of deposit, Treasury bonds, and savings bonds, all of which are subject to federal income tax. It may also display tax-exempt interest from municipal bonds issued by a state or its political subdivisions. Each payer must furnish this form for tax purposes so the income is accurately reported on the taxpayer’s federal tax return.
This form is also used when an amended filing becomes necessary. A person may need to file a correction if the amounts paid, taxpayer identification number, or other details were entered incorrectly. For payers, timely filing is essential to avoid penalties, while recipients must keep copies of every 1099-INT to ensure all income is reported in accordance with Internal Revenue Service requirements.
For complete details on reporting, withholdings, and tax filings, see our guide for Information Returns & Reporting Forms.
Key Rules or Details for 2021
The IRS Form 1099 INT 2021 outlines how to report taxable interest and tax-exempt interest earned during the year. Interest paid on savings bonds or Treasury bonds is generally taxable at the federal level, while interest on municipal bonds is exempt from federal taxes but must still be reported. Box 1 lists taxable income, Box 3 lists U.S. obligations, and Box 8 lists tax-exempt interest. Some certificates and bonds may also include original issue discount amounts that accrue over time and must be included in taxable income.
Backup withholding applies if a taxpayer fails to provide a correct identification number, requiring the payer to withhold a percentage of the interest. Earnings from traditional IRAs or other retirement plans are not included on this form because they are taxed when distributions occur. All amounts must be reported on Form 1040 or Schedule B to ensure income is taxed correctly and to maintain compliance with Internal Revenue Service law.
Step-by-Step (High Level)
For Taxpayers
- Gather all Form 1099-INT statements received from banks, credit unions, and other payers for 2021.
- Review each form for accuracy, including the name, taxpayer identification number, and total amounts.
- Separate interests by category. Identify taxable, tax-exempt, and U.S. Treasury bond interest since each is reported differently.
- Report taxable interest on Form 1040, line 2b, or on Schedule B if total interest exceeds $1,500. Report tax-exempt interest on Form 1040, line 2a.
- Deduct early withdrawal penalties shown in Box 2 on Schedule 1 to reduce taxable income.
- Keep all forms and supporting records for at least three years for verification or amendments.
For Financial Institutions
- Identify all accounts that paid ten dollars or more in interest or had backup withholding during 2021.
- Verify that each taxpayer’s identification number and name are correct before filing.
- Complete all boxes accurately, including taxable interest, tax-exempt interest, and any penalties or withholding.
- Furnish copies to recipients by January 31, 2022. If sent electronically, obtain consent from recipients.
- File Copy A with the IRS by February 28 for paper filers or by March 31 for electronic submissions. Attach Form 1096 when filing by paper.
- Retain records and file corrections promptly if errors are found.
Common Mistakes and How to Avoid Them
Taxpayers and payers often make avoidable errors when reporting interest income. The most frequent mistakes include:
- Failing to report interest under $10 when no Form 1099-INT is issued: Report all taxable interest using bank and brokerage statements, even if you do not receive a form.
- Misunderstanding tax-exempt interest reporting: Report municipal bond interest on the return even when it is federally tax-exempt, since it can affect other tax calculations.
- Using incorrect taxpayer identification numbers: Verify names and TINs before filing to prevent backup withholding, IRS notices, and processing delays.
- Omitting Form 1096 when paper filing: Include Form 1096 with paper-filed information returns and confirm you are not required to e-file.
- Using the wrong filing method for information returns: Check whether e-filing is required and follow the correct submission rules to avoid fines and rejected filings.
Accurate reporting, correct taxpayer information, and adherence to filing requirements help prevent IRS notices, penalties, and compliance issues.
What Happens After You File
Once the taxpayer files a federal income tax return, the Internal Revenue Service matches the information from each Form 1099 INT to the amounts reported. If everything matches, the return is processed normally, and any refund due is issued. If a difference exists, the taxpayer may receive a notice requesting verification or payment of additional taxes owed.
Financial institutions and affiliates that file late or incorrectly may receive penalty notices. When corrections are filed promptly, penalties can be reduced or waived. Taxpayers should keep all filed forms, including 1099 INT copies, for several years in case the IRS reviews the reported income or questions the amounts paid or accrued on bonds, CDs, or savings accounts.
FAQs
What is IRS Form 1099-INT (2021) used for?
IRS Form 1099-INT (2021) reports interest income paid by banks, credit unions, or other institutions. It helps the Internal Revenue Service ensure that all taxable interest and non-taxable interest are adequately documented for federal income tax purposes.
How do I report interest income from savings accounts or bonds?
Interest income from savings accounts, Treasury bonds, and savings bonds must be reported on Form 1040 or Schedule B. The amounts paid or accrued are taxable and subject to federal income tax under current IRS law.
Is interest from municipal bonds or Treasury bonds taxable?
Interest from Treasury bonds is generally taxable, while municipal bonds issued by a state or political subdivision may provide tax-exempt interest. These earnings must still be reported on the taxpayer’s federal tax return for accurate tax purposes.
What if I need to file an amended 1099 INT?
A person should file an amended Form 1099 INT if incorrect amounts, names, or identification numbers were reported. Filing promptly helps reduce penalties and ensures that the Internal Revenue Service receives accurate information on taxable income.
Does interest from traditional IRAs or CDs appear on Form 1099-INT?
Interest earned within traditional IRAs is not reported on Form 1099-INT because it is taxed later when distributions occur. However, interest paid on CDs or certificates of deposit is taxable and must be reported to the IRS.
For more resources on filing or understanding prior-year IRS forms, visit our Form Summaries and Guides Library or see our IRS assistance guide.
