What Form 1099-INT (2018) Is For
IRS Form 1099-INT (2018) is issued by a financial institution, such as a bank, credit union, or broker, to report interest income earned during the year. It helps the Internal Revenue Service ensure that all taxable and tax-exempt interest is correctly reported on a person’s federal income tax return. The form covers interest from savings accounts, certificates of deposit, savings bonds, and other bonds issued by U.S. or state entities.
The purpose of Form 1099-INT is to identify how much interest income a taxpayer received and ensure it is correctly taxed. The form shows taxable interest, tax-exempt interest from municipal bonds, and other amounts paid throughout the year. These details help taxpayers prepare a complete and accurate income tax return, ensuring that their earnings and taxes are correctly reported to the IRS.
When You’d Use Form 1099-INT
A taxpayer uses Form 1099-INT when a financial institution has paid at least $10 in interest during the tax year. This document must be issued to recipients by January 31 and reported on the taxpayer’s federal income tax return. The information ensures the IRS can match what a person reports with the data filed by the payer, reducing the risk of underreporting or errors.
If the form contains mistakes or a corrected version is issued, the taxpayer may need to file an amended income tax return. Errors in reporting taxable interest or missing Social Security numbers can lead to backup withholding or delayed refunds. Filing timely and accurately helps avoid penalties and ensures that all interest income is correctly accounted for on the federal tax return.
Key Rules or Details for 2018
For 2018, IRS Form 1099-INT required financial institutions to report at least $10 in interest income paid to each person during the year. The backup withholding rate was reduced to 24 percent when the Internal Revenue Service identified incorrect Social Security numbers or underreported income. Taxpayers who earned interest from savings accounts, CDs, savings bonds, or municipal bonds had to include all taxable interest on their federal income tax return and complete Schedule B if total earnings exceeded $1,500.
For complete details on reporting, withholdings, and tax filings, see our guide for Information Returns & Reporting Forms.
Step-by-Step (High Level)
Step 1: Confirm Receipt of IRS Form 1099-INT (2018)
Taxpayers should check their mail or online banking portals in January to confirm they received Form 1099-INT from each financial institution. The form reports interest income from savings accounts, CDs, savings bonds, and other accounts paid during the year.
Step 2: Review and Verify Information on the Form
Each person should review the form to confirm that the names, addresses, and Social Security numbers are correct. They should verify that the taxable interest and tax-exempt interest reported match what was earned and what the Internal Revenue Service will review.
Step 3: Report Interest Income on the Federal Tax Return
Taxpayers should include all interest income on the federal income tax return. If total interest and dividends exceed $1,500, Schedule B must be completed, showing taxable interest, tax-exempt interest, and related earnings from municipal bonds or savings bonds.
Step 4: Retain Records and Supporting Documents
Each taxpayer should retain Form 1099-INT, account certificates, and statements for a minimum of three years. Accurate record-keeping helps verify the reported income, support refund claims, and confirm that taxes were paid correctly to the IRS.
Step 5: File and Correct Any Reporting Errors
Financial institutions must file all Form 1099-INT records with the Internal Revenue Service by February 28 for paper filing or March 31 for electronic submission. If errors appear in the reported interest income or taxpayer identification, corrected forms should be issued promptly to ensure accurate and timely reporting.
Common Mistakes and How to Avoid Them
Taxpayers often make errors when reporting interest income, which can result in IRS notices or incorrect tax calculations. Common issues include:
- Failing to report small amounts of interest: All interest income is taxable, even if it’s less than $10 or no Form 1099-INT was issued.
- Using incorrect or mismatched Social Security numbers: Ensure account information matches government records to avoid backup withholding and IRS correspondence.
- Mixing taxable and tax-exempt interest: Taxable interest appears in Box 1, while tax-exempt interest (such as from municipal bonds) appears in Box 8. Only taxable amounts increase federal income tax.
- Overlooking early withdrawal penalties: Penalties from certificates of deposit should be reported and may reduce taxable interest income.
- Ignoring backup withholding credits: Include withheld amounts as credits when filing your return to ensure accurate tax calculations.
- Missing electronic filing requirements: Payers that issue 250 or more forms must file electronically in accordance with IRS rules.
Reviewing account details, verifying identification information, and understanding reporting categories help taxpayers avoid penalties and ensure compliance with tax regulations.
What Happens After You File
After filing a federal income tax return, the Internal Revenue Service compares the interest income reported with the Form 1099-INT data submitted by each financial institution. If taxable interest, tax-exempt interest, or total amounts paid do not match, the IRS may send a notice or adjust the taxes owed. Accurate reporting of all income from savings bonds, savings accounts, and municipal bonds ensures the timely processing of refunds and prevents errors on future federal tax returns.
FAQs
What is the purpose of IRS Form 1099-INT (2018)?
IRS Form 1099-INT (2018) is used by a financial institution, such as a bank or credit union, to report interest income paid to a person during the tax year. The Internal Revenue Service requires taxpayers to include all taxable and tax-exempt interest on their federal income tax return.
Is interest income from savings accounts and bonds taxable?
Yes, interest income earned from savings accounts, certificates of deposit, and U.S. savings bonds is taxable and must be reported on a federal income tax return. Some exceptions apply, such as tax-exempt interest from municipal bonds issued by a state or local government.
When should a taxpayer file Form 1099-INT on their income tax return?
A person should use Form 1099-INT when at least $10 in interest income was paid during the year. Financial institutions must submit the form by January 31, and taxpayers must include the reported amounts on their federal tax return using Schedule B, as required by law.
What should I do if my Social Security number is incorrect on Form 1099-INT?
If the Social Security number or other account details are incorrect, contact the financial institution immediately to request a corrected Form 1099-INT. Filing accurate information helps the IRS properly match the reported interest income and prevents errors in the income tax return.
How does tax-exempt interest affect my federal income tax return?
The IRS does not tax tax-exempt interest from municipal bonds or certain savings bonds; however, it must still be reported on the federal income tax return. Reporting all interest income, including tax-exempt amounts, ensures accurate calculations for credits, deductions, and higher education plans.
