What Form 1099-INT (2014) Is For
Form 1099-INT reports interest income you received during the 2014 tax year from a financial institution or other entity. It includes taxable interest, tax-exempt interest, private activity bond interest, savings bond interest, and interest paid on various debt instruments. The form also shows federal income tax withheld, foreign tax, and other details the Internal Revenue Service uses to match income you report on your federal income tax return. Taxpayers use this tax form to report interest received, calculate taxable income, and ensure they pay income tax accurately on their annual tax return.
When You’d Use Form 1099-INT (2014)
You use this tax form when you receive interest payments from bank accounts, savings bonds, Treasury obligations, or taxable bonds during the tax year. You also use it if a foreign financial institution reports interest income or if a financial institution applies backup withholding. Taxpayers who receive interest from multiple accounts or who receive recipient copies by postal mail or electronically must include the net amount of interest earned when filing a federal income tax return. The above requirement applies whether you file using e-filing or paper filing.
Key Rules or Details for 2014
- Reporting threshold: Financial institutions issue Form 1099-INT when you receive at least ten dollars of interest income, and this amount includes interest from multiple accounts. Interest received below that threshold still requires you to pay income tax and must appear on your tax return.
- Backup withholding: Backup withholding applies when the Internal Revenue Service identifies incorrect information, and the financial institution withholds a portion of interest payments. Taxpayers report federal income tax withheld and use it to reduce their total income tax due.
- Tax-exempt interest: Tax-exempt interest from a tax-exempt bond still appears on the form because this income affects gross income calculations. You report tax-exempt interest even though you do not pay income tax on that portion.
- Private activity bond interest: Interest from a private activity bond requires special reporting because certain obligations issued under these programs affect taxable income. Taxpayers must use the appropriate form when tax-exempt rules change their calculations.
- Treasury obligations: Interest from Treasury bills, Treasury notes, or other Treasury obligations remains taxable for federal income tax purposes, and you must include the interest income reported, even if your foreign country does not tax such payments.
- Early withdrawal penalties: Early withdrawal from a debt instrument may result in a reduction of the face value you receive, and the form reports this net amount. Taxpayers claim investment expenses or market discount adjustments at the appropriate time on their tax returns.
Browse more tax form instructions and filing guides in our Forms Hub.
Step-by-Step (High Level)
Step 1: Gather Your Forms
Collect all recipient copies of Form 1099-INT from each financial institution or other financial institution for the tax year. Confirm that your name, account number, and address match the information that payers send to the Internal Revenue Service.
Step 2: Review the Key Boxes
Review boxes for taxable interest income, tax-exempt interest, federal income tax withheld, foreign tax, and private activity bond interest. Make sure Treasury obligations, savings bond interest, and maturity date details appear correctly before you prepare tax returns.
Step 3: Report the Information on Your Tax Return
Enter taxable interest on the taxable income line of your federal income tax return and place tax-exempt interest on the appropriate line. Double-check figures from every tax form before you file.
Step 4: Include Any Withholding
Add the federal income tax withholding and foreign tax from Form 1099-INT to your total tax payments. Verify each amount before filing so the Internal Revenue Service credits your account correctly.
Step 5: Keep Complete Records
Keep recipient copies, related tax forms, and correspondence from financial institutions in a secure place. Retain records for several years to resolve Internal Revenue Service questions quickly.
Learn more about federal tax filing through our IRS Form Help Center.
Common Mistakes and How to Avoid Them
- Missing Forms: Taxpayers often forget to file Form 1099-INT for smaller or closed accounts. You can avoid this mistake by listing the account numbers and ensuring that each recipient receives their copy of Form 1099-INT.
- Mixing taxable and exempt interest: Taxable interest requires income tax, while exempt interest does not. You can avoid this by reporting them on separate lines.
- Ignoring foreign tax entries: Taxpayers skip boxes showing foreign tax on interest. You can avoid this error by entering each amount directly on the foreign tax line.
- Not reporting backup withholding: Backup withholding is federal income tax withheld to reduce the tax due. You can avoid this mistake by adding each amount to your withholding.
- Early withdrawal penalties: Early withdrawal reduces interest paid and changes the net amount. You can avoid errors by reporting that net amount exactly as shown.
Learn more about how to avoid business tax problems in our guide on How to File and Avoid Penalties.
What Happens After You File
The Internal Revenue Service matches interest income reported on Form 1099-INT with income you report on your federal income tax return. If the amounts match, your return proceeds through normal processing, and any payment or refund is posted without delay. If mismatches occur, the agency contacts you for clarification using the same information that financial institutions provide. This process applies whether you use e-filing or paper filing.
FAQs
Why does Form 1099-INT require me to report federal income tax on small amounts of interest income?
You must report all interest earned because the Internal Revenue Service treats interest income as taxable income even when amounts fall below the reporting threshold.
How do I handle foreign tax on 1099-INT if I receive interest from a foreign financial institution?
You report foreign tax exactly as shown on the form and include it on your federal income tax return as a tax payment or credit, depending on your situation.
Why does a tax-exempt bond appear on Form 1099-INT even though I do not pay income tax on it?
Tax-exempt interest still affects your gross income calculations, so the Internal Revenue Service requires reporting even when the amount does not increase the amount you pay in income tax.
What happens if the federal income tax withheld on Form 1099-INT does not match my records?
You must verify the amount with the financial institution and correct your tax return if necessary, because withholding must match Internal Revenue Service records.
How do I file Form 1099-INT for Treasury obligations and savings bonds when using paper filings?
You enter the interest amounts exactly as listed on your form and attach any recipient copies required for verification when using paper filing.
Why does early withdrawal of interest income reduce the net amount reported on the form?
Early withdrawal reduces interest paid on the debt instrument, so the form shows the correct net amount for your taxable income reporting.
