Form 1099-INT: Interest Income (Tax Year 2020)

Form 1099-INT is one of the most common tax documents Americans receive each year. If you earned interest from a bank account, savings bond, or other investment in 2020, you likely received this form. Understanding what it means and how to handle it correctly can help you file your taxes accurately and avoid problems with the IRS.

What the Form Is For

Form 1099-INT, Interest Income, is an information return used to report interest payments made to you during the calendar year. Financial institutions, banks, credit unions, and other organizations use this form to tell both you and the IRS about the taxable interest you earned.

According to the IRS, payers must file Form 1099-INT for each person to whom they paid amounts reportable in boxes 1, 3, and 8 of at least $10. The form is also required for anyone for whom the payer withheld and paid any foreign tax on interest, or from whom they withheld any federal income tax under backup withholding rules, regardless of the payment amount.

Types of Interest Reported

The form reports various types of interest income, including:

Interest on bank deposits
Accumulated dividends paid by life insurance companies
Interest on bonds and other debt instruments
U.S. Savings Bonds, Treasury bills, Treasury notes, and Treasury bonds

It also includes interest of $600 or more paid in the course of a trade or business, such as interest on delayed death benefits or interest on state or federal income tax refunds.

Who Issues the Form

Form 1099-INT is issued only for interest payments made in the course of the payer’s trade or business, including federal, state, and local government agencies.
Your bank, brokerage, or other financial institution prepares this form, sends you a copy by January 31, and files a copy with the IRS.

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

Standard Filing Timeline

For tax year 2020, payers had specific deadlines:

Send Copy B to recipients by January 31, 2021
File Copy A with the IRS by March 1, 2021 (paper) or March 31, 2021 (electronic)

As a recipient, you use the information from your Form 1099-INT when preparing your 2020 tax return (originally due April 15, 2021). All interest income shown on your 1099-INT forms must be reported on your tax return, even if it’s less than $10.

Late or Amended Situations

If you discover you forgot to report interest income after filing your 2020 return, you should file an amended return using Form 1040-X.

The IRS allows 3 years from the filing date or 2 years from the payment date (whichever is later) to claim a refund.
For the 2020 tax year, this generally means you had until April 15, 2024 to amend.

If you receive a corrected Form 1099-INT showing different amounts, review whether an amended return is needed. Discrepancies between 1099-INT data and your filed return can trigger IRS notices (commonly CP2000).

There’s no strict IRS deadline for payers to issue corrected 1099-INT forms, but the IRS prefers corrections within three years of the initial filing.

Key Rules for 2020

Reporting Thresholds

The primary reporting threshold is $10 in interest income.
However, for interest of $600 or more paid in the course of a trade or business, reporting is required regardless of other criteria.

What Must Be Reported

Box 1 — Interest Income

Includes taxable interest such as interest on bank deposits, CDs, bonds, and other debt instruments. Also includes accumulated dividends from life insurance companies and interest from REMICs and WHFITs.

Box 3 — Interest on U.S. Savings Bonds and Treasury Obligations

Reports U.S. Treasury interest separately because it may be exempt from state and local taxes.

Box 8 — Tax-Exempt Interest

Shows interest that’s exempt from federal income tax, typically from municipal bonds. It still must be reported and can affect tax calculations.

Exempt Recipients

Certain entities don’t receive Form 1099-INT, including:

Corporations
Tax-exempt organizations
IRAs and HSAs
Registered securities dealers
Government agencies

Interest Excluded from Reporting

Interest that does not require a Form 1099-INT includes:

Interest on obligations issued by individuals
Tax-deferred interest (such as IRA earnings)
Certain portfolio interest
Interest from non-U.S. sources paid by non-U.S. payers

Step-by-Step Overview (High Level)

For Recipients (Individual Taxpayers)

Step 1: Receive and Review

By January 31, 2021, you should have received all your Forms 1099-INT. Review for accuracy—check your name, address, and SSN.

Step 2: Understand the Boxes

Box 1: Taxable interest
Box 2: Early withdrawal penalties (deductible)
Box 3: U.S. Treasury interest
Box 4: Federal income tax withheld (backup withholding)
Box 8: Tax-exempt interest

Step 3: Report on Your Tax Return

Report Box 1 amounts on Form 1040, Line 2b.
If your total taxable interest exceeds $1,500, attach Schedule B listing each payer and amount.
Report tax-exempt interest (Box 8) on Form 1040, Line 2a.

Step 4: Keep Records

Retain copies of all 1099-INT forms for at least 3 years. Longer is better for investment-related documents.

For Payers (Financial Institutions)

Payers must:

Identify eligible recipients
Calculate reportable interest
Prepare and distribute individual forms
File Copy A with the IRS
Provide Copy B to recipients by January 31
File electronically if submitting 250 or more returns

Common Mistakes and How to Avoid Them

1. Failing to Report Small Amounts

Even if interest is less than $10, it’s taxable and must be reported.

2. Confusing Box 1 and Box 3

Both are federally taxable—Box 3 is only exempt from state/local taxes, not federal.

3. Missing the Schedule B Requirement

If total interest > $1,500, Schedule B is required. Missing it can delay processing.

4. Incorrectly Reporting Tax-Exempt Interest

Box 8 interest must still be reported (Form 1040, Line 2a). It can affect tax credits and Social Security taxation.

5. Not Following Up on Missing Forms

If you don’t receive a 1099-INT by mid-February, contact your bank or use your own records.

6. Neglecting Early Withdrawal Penalties

Box 2 penalties are deductible on Schedule 1—don’t overlook them.

7. Ignoring Backup Withholding

If Box 4 shows withheld tax, report it as a credit on your return. It counts toward taxes paid.

What Happens After You File

IRS Matching Process

After you file, the IRS compares your reported interest with payer-filed Forms 1099-INT.
Discrepancies trigger a CP2000 notice proposing changes and additional tax.

If Everything Matches

Your return processes normally—refunds or payments are applied as usual.

If There’s a Discrepancy

Respond promptly (within 30 days) with documentation.
If you underreported, you’ll need to pay the difference plus interest (and possibly a penalty).

Statute of Limitations

The IRS generally has 3 years to assess additional tax.
If you underreport by >25%, it extends to 6 years.
If you never filed, there’s no time limit.

Frequently Asked Questions (FAQs)

Q1: Do I need to report interest if I didn’t receive a Form 1099-INT?

A: Yes. All interest is taxable, even under $10. Use your bank statements to determine the amount.

Q2: What’s the difference between Box 1 and Box 3 interest?

A: Box 1 covers general interest (banks, CDs, bonds).
Box 3 covers U.S. Treasury obligations—taxable federally, exempt from state/local taxes.

Q3: Is tax-exempt interest really tax-free?

A: Generally yes, but it can affect other tax items like Social Security benefits or AMT if from private activity bonds (Box 9).

Q4: What should I do if my Form 1099-INT has an error?

A: Contact the payer for a corrected form. If already filed, wait for the correction and file Form 1040-X if needed.

Q5: Can I deduct the interest I paid on a loan?

A: No. Form 1099-INT reports interest you earned, not interest you paid. Loan interest deductions come from Forms 1098 or 1098-E.

Q6: Why did I receive a Form 1099-INT from the IRS?

A: The IRS issues one if it paid you interest on a delayed refund. This interest is taxable.

Q7: What is backup withholding and why is it in Box 4?

A: It’s a 24% tax withholding applied when your TIN is missing or incorrect. The amount counts as tax withheld on your return.

Sources

All information in this guide comes from official IRS publications for tax year 2020, including:

2020 Instructions for Forms 1099-INT and 1099-OID
Form 1099-INT (2020 revision)
2020 General Instructions for Certain Information Returns
IRS.gov

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