What Form 1099-INT (2020) Is For
IRS Form 1099-INT (2020) is an information return issued by financial institutions, credit unions, savings and loan associations, and mutual funds to report interest income earned during the year. The Internal Revenue Service (IRS) uses it to ensure that all interest payments are adequately documented for federal income tax purposes.
This form applies to anyone who earned at least $10 in interest during 2020 from savings accounts, certificates of deposit, money market funds, or similar investments. It reports taxable interest income, tax-exempt interest, and other interest paid that contribute to a taxpayer’s federal taxable income. The information is also used to calculate total income tax owed and determine whether the recipient must include the interest in gross income.
When You’d Use Form 1099-INT
Taxpayers use Form 1099-INT when reporting interest income earned during the year from savings accounts, money market funds, credit unions, and savings and loan associations. For the 2020 tax year, payers were required to issue the form to anyone who received at least $10 in interest payments, with Copy A filed with the Internal Revenue Service and Copy B provided to the recipient. The information reported affects a taxpayer’s federal income tax and contributes to federal taxable income, including taxable interest income and tax-exempt interest income.
An amended tax return may be necessary if a person later receives a corrected 1099-INT showing different amounts of interest received or interest paid. Taxpayers should consult a tax professional to determine whether a Form 1040-X is needed. Even small amounts of taxable interest must be reported to ensure accurate income tax calculations and avoid issues with the IRS.
Key Rules or Details for Tax Year 2020
The IRS Form 1099 INT 2020 includes multiple boxes for reporting different types of interest income—box one reports taxable interest from savings accounts, mutual funds, and similar investments. Box 3 covers interest from savings bonds, Treasury bonds, and other direct obligations issued by the federal government. Box 8 reports tax-exempt interest from municipal bonds or other obligations issued by state and local governments. These payments, while sometimes exempt, still influence taxable income and must be reported on the tax return.
Interest paid or credited by mutual funds, Fannie Mae, Ginnie Mae, or other entities may also appear on the form. Taxpayers must include all taxable interest and exempt interest dividends in their gross income, as required. Individuals with more than $1,500 in total interest income are required to attach Schedule B to their tax return. Each amount, whether taxable or exempt, affects deductions, credits, and overall taxation of earnings.
For complete details on reporting, withholdings, and tax filings, see our guide for Information Returns & Reporting Forms.
Step-by-Step (High Level)
For Recipients
- Verify that the name, address, and Social Security number on Form 1099-INT are correct before filing the tax return.
- Match the total interest received and interest paid with account statements to ensure accurate reporting.
- Report taxable interest income on Form 1040, Line 2b, and tax-exempt interest income on Form 1040, Line 2a.
- Attach Schedule B to the tax return if total taxable interest income exceeds $1,500.
- Keep Form 1099-INT, related statements, and documentation for at least three years for IRS reference.
For Payers
- Identify all accounts that generated reportable interest income during the tax year.
- Calculate the correct amount of interest paid to each person or other entity, including any backup withholding.
- File Copy A of Form 1099-INT with the Internal Revenue Service by the filing deadline.
- Provide Copy B of Form 1099-INT to the recipient no later than January 31.
- Maintain all filed copies and supporting records for a minimum of four years to comply with IRS requirements.
Common Mistakes and How to Avoid Them
Many taxpayers make preventable errors when reporting interest income. The most frequent issues include:
- Failing to report small amounts of interest: Report all interest income, even minor amounts, since payers report Form 1099-INT information to the IRS.
- Confusing taxable vs. tax-exempt interest: Distinguish Treasury interest (federally taxable, often state-exempt) from municipal bond interest (often federally tax-exempt but potentially taxable at the state level).
- Ignoring the Schedule B filing requirement: Attach Schedule B when the total taxable interest exceeds $1,500 to avoid incomplete filing issues.
- Overlooking backup withholding credits: Report any federal tax withheld as backup withholding as a credit so you receive proper payment credit on your return.
- Missing interest income due to late or corrected forms: Use your account records to report interest if a 1099-INT is delayed, and update filings if a corrected form changes the amounts.
By verifying records, understanding tax-exempt classifications, and following filing requirements, taxpayers can avoid notices, penalties, and delays in processing their tax returns.
What Happens After You File
After filing a tax return, the Internal Revenue Service reviews the information reported on Form 1040. It matches it with the data submitted on each Form 1099-INT by banks, credit unions, mutual funds, and other entities. If the taxable interest income, tax-exempt interest, and total interest paid align, the return process typically proceeds, and any refund is issued as expected. However, suppose the IRS identifies differences in interest received, such as unreported amounts from savings bonds, Treasury bonds, or municipal bonds. In that case, it may issue a notice requesting clarification or payment of additional federal income tax. Accurate reporting of all interest income ensures proper taxation and avoids penalties or delays.
FAQs
What is IRS Form 1099-INT (2020) used for?
The IRS Form 1099 INT 2020 reports interest income earned from savings accounts, credit unions, money market funds, and savings and loan associations. It helps the Internal Revenue Service verify taxable interest income, tax-exempt interest, and total interest paid for accurate federal income tax reporting.
How does interest income affect my federal taxable income?
Interest received from savings bonds, Treasury bonds, and mutual funds increases a taxpayer’s federal taxable income. Taxable interest income must be reported on a tax return, while tax-exempt interest income, such as from municipal bonds, still affects overall income tax calculations.
Do I need to report tax-exempt interest?
Yes, even though tax-exempt interest from municipal bonds or other obligations issued by state and local governments is not taxed federally, it must be reported on Form 1040. This ensures accurate determination of deductions, credits, and total taxable income.
When should Schedule B be filed with a tax return?
Schedule B should be attached if the total taxable interest income exceeds $1,500. This includes amounts from credit unions, mutual funds, and obligations such as Fannie Mae or Ginnie Mae bonds issued by federal or local governments, as well as other entities.
What should I do if my Form 1099-INT contains an error?
If a Form 1099-INT shows incorrect interest payments, contact the payer to request a corrected form. A tax professional can determine whether an amended tax return is necessary to ensure proper reporting of income, taxes, and refund eligibility.
For more resources on filing or understanding prior-year IRS forms, visit our Form Summaries and Guides Library or see our IRS assistance guide.
