What Form 1099-INT (2023) Is For
Financial institutions use IRS Form 1099-INT (2023) to report interest income earned by taxpayers during the tax year. It includes interest paid from savings accounts, certificates of deposit, treasury bonds, and municipal bonds. The Internal Revenue Service uses the interest income reported on this tax form to verify that all taxable interest and tax-exempt interest are appropriately included in a taxpayer’s gross income.
The form also helps identify taxable interest income, exempt interest dividends, and private activity bond interest. Financial institutions, credit unions, and other entities must send recipient copies by January 31. Even if taxpayers do not receive the form, they must report all interest received on their federal income tax return.
When You’d Use Form 1099-INT
Taxpayers use Form 1099-INT when they receive interest income from one or more financial institutions during the tax year. Most interest income reported on the form is considered ordinary income and is subject to federal income tax. However, tax-exempt interest income from municipal or government obligations must still be listed even though it does not increase taxable income.
If a taxpayer receives a corrected or late Form 1099-INT, they may need to file an amended federal income tax return using Form 1040-X. This situation often occurs when additional interest payments or foreign tax adjustments are discovered after the original filing. Reporting total interest income accurately ensures the correct payment of income tax.
For complete details on reporting, withholdings, and tax filings, see our guide for Information Returns & Reporting Forms.
Key Rules or Details for 2023
For tax year 2023, Form 1099-INT must be issued if at least $10 in interest was paid. Interest from treasury notes, savings bonds, or mutual funds must be reported as taxable interest income. Tax-exempt interest from municipal bonds or other political subdivisions must also appear on the tax return for informational purposes.
Foreign tax paid on interest from a foreign country is reported in Box 6, while private activity bond interest appears in Box 9. Taxpayers must include all interest earned from money market funds, government obligations, or multiple accounts, even if they do not receive a form. Backup withholding or early withdrawal penalties should also be reported to avoid IRS mismatches during processing.
Step-by-Step (High Level)
Step 1: Gather all forms and information
Collect every Form 1099-INT received from banks, credit unions, or other payers. Keep recipient copies with other tax forms and verify that the account number and recipient information are correct.
Step 2: Review details carefully
Verify the accuracy of each form, including the amounts reported in Boxes 1, 3, 4, 6, 8, and 9. Verify the payer’s name, taxpayer identification number, and FATCA filing requirement if applicable.
Step 3: Add all amounts paid
Add the total interest income reported across all forms, including taxable interest and tax-exempt interest income. Also include any early withdrawal penalties, bond premium adjustments, or market discount.
Step 4: Report the totals on the federal income tax return
Taxpayers with $1,500 or less in interest income generally report the total directly on Form 1040, line 2b. If interest income exceeds $1,500, or if foreign tax or private activity bond interest is involved, Schedule B must be filed.
Step 5: Retain all documentation
Maintain copies of all 1099-INT forms, account statements, and any correspondence for at least three years after filing the return.
Common Mistakes and How to Avoid Them
Taxpayers often make preventable mistakes when reporting interest income. The most frequent errors include:
- Not reporting interest under $10 when no Form 1099-INT is issued: Report all interest income using bank and brokerage statements, even if you do not receive a form.
- Reporting tax-exempt interest as taxable: Enter Box 8 interest as tax-exempt on the return for informational purposes, but do not treat it as federally taxable income.
- Overlooking early withdrawal penalties in Box 2: Claim the penalty as an adjustment on Schedule 1 when eligible to reduce taxable income.
- Ignoring nominee interest in joint accounts: Report the total interest on your return and issue the co-owner a separate Form 1099-INT for their share when required.
- Making calculation errors across multiple accounts: Reconcile totals carefully and use reliable tax software to prevent mismatched amounts and IRS notices.
Reviewing all account records, verifying exemption details, and reconciling totals before filing ensures compliance and prevents issues with the IRS or underreporting.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
After filing a federal income tax return, the Internal Revenue Service compares the total interest income reported with the copies submitted by financial institutions. If the taxable interest or tax-exempt bond income matches, the return is accepted without issue.
If discrepancies arise—such as unreported interest received or differences in amounts paid—the IRS may issue a CP2000 notice proposing changes. Taxpayers can respond with documentation to verify reported totals or pay interest income tax owed. Accurate filing helps prevent penalties and ensures that all the necessary information, including taxable bond and exempt interest data, is properly recorded.
FAQs
What is IRS Form 1099-INT (2023) used for?
IRS Form 1099-INT (2023) is the tax form used by financial institutions to report interest income earned during the tax year. It includes interest paid from savings accounts, treasury bonds, and other taxable bond or tax-exempt bond sources to ensure accurate income reporting.
Is tax-exempt interest reported on Form 1099-INT taxable?
Tax-exempt interest income from municipal bonds or government obligations must still be reported on a federal income tax return. Although it does not increase taxable income, the Internal Revenue Service requires it for informational purposes and to verify exempt interest and dividend income.
What should I do if I receive interest income from multiple accounts?
Taxpayers who receive interest income from multiple accounts or financial institutions must add the total interest income reported on all Form 1099-INT copies. All amounts paid, including taxable interest and exempt interest, must be included in gross income or reported appropriately on Schedule B.
How are foreign tax and private activity bond interest handled?
Foreign tax paid on interest from a foreign country and private activity bond interest from certain obligations issued by political subdivisions must be reported. These amounts affect taxable income and may qualify for credits or deductions when filing a federal income tax return.
Can savings bonds and treasury obligations affect taxable interest income?
Interest earned from savings bonds, Treasury notes, or Treasury obligations is generally subject to federal income tax but exempt from state and local income taxes. The total interest income reported on Form 1099-INT ensures proper calculation of income tax owed to the Internal Revenue Service.
