Introduction
The 1099-INT form is a tax document issued by banks, credit unions, and other financial institutions to report interest income earned by individuals throughout the year. This form is crucial for tax reporting as it helps the IRS track taxable interest income received from various financial sources. Even if you do not receive a physical 1099-INT form, you are still required to report any interest income earned, including amounts below $10.
Interest income is any earnings accrued from interest-bearing financial instruments such as savings accounts, money market accounts, and certificates of deposit (CDs). This form allows the IRS to ensure that all interest income is properly reported and taxed where applicable. Even if the amount of interest earned is small, failing to report it can lead to potential issues with the IRS.
The form includes several key pieces of information:
- The total interest earned
- Any federal income tax withheld
- Any early withdrawal penalties
- Foreign tax paid on interest income
- Tax-exempt interest income, if applicable
Understanding the 1099-INT form and its implications on your tax return is essential to avoiding errors and ensuring compliance with tax laws.
Who Receives a 1099-INT Form?
Individuals receive a 1099-INT if they earn $10 or more in interest from:
- Savings accounts
- Certificates of Deposit (CDs)
- Money market accounts
- Treasury bonds and municipal bonds
- Peer-to-peer lending platforms
- Online financial platforms offering interest-bearing accounts
Taxable vs. Tax-Exempt Interest:
- Taxable interest: Reported on Schedule B of Form 1040 and subject to federal income tax. This includes most forms of interest, such as savings account interest, CD interest, and interest earned on bonds.
- Tax-exempt interest: Typically earned from municipal bonds and reported separately. While it is not federally taxed, some states may impose taxes. Investors should be aware of the tax implications at both the federal and state levels when investing in tax-exempt bonds.
Interest income may seem insignificant, but it can add up over time, especially for individuals with high-yield accounts or multiple financial investments. Failing to properly report interest income may result in tax penalties or an IRS audit.
Who Needs to File a 1099-INT?
Financial institutions, including banks and investment firms, are required to issue a 1099-INT to individuals who earn at least $10 in taxable interest. Additionally, if you lend money to others and receive interest payments, you may also need to issue a 1099-INT.
If you are an individual who has received interest from private loans or investments, you may be responsible for issuing a 1099-INT to the borrower. In such cases, you should consult a tax professional to determine your reporting obligations.
Platforms That Issue 1099-INT Forms
Below is a table of financial institutions that issue 1099-INT forms for taxable interest earnings:
| Institution Issuing 1099-INT | Type of Interest Reported | Who Receives It? |
| Chase 1099-INT | Savings & checking account interest | Customers earning over $10 in interest from Chase accounts |
| Wells Fargo 1099-INT | Interest from high-yield savings & CDs | Customers with interest-bearing Wells Fargo accounts |
| Ally Bank 1099-INT | Online savings, money market, & CD interest | Ally customers receiving taxable interest |
| SoFi 1099-INT | Interest from savings & checking accounts | SoFi users earning interest on deposits |
| PayPal Savings 1099-INT | Interest from PayPal savings accounts | PayPal users earning over $10 in interest |
| American Express Savings 1099-INT | High-yield savings & CD interest | Amex users with interest earnings |
| Capital One 1099-INT | Savings account & money market interest | Capital One customers with taxable interest |
| Discover Bank 1099-INT | Interest from savings, CDs, & MMAs | Discover account holders earning interest |
The above institutions are some of the most common sources of interest income. However, many other financial platforms, including newer fintech companies, also issue 1099-INT forms.
How to File Taxes with a 1099-INT Form
For Recipients:
- Report 1099-INT interest income on Schedule B if total interest exceeds $1,500.
- Include foreign interest income, as it is still taxable in the U.S.
- If the form reports tax-exempt interest, disclose it on your return, but no federal tax is owed.
- Verify that all interest income is accurately recorded on your tax return. Double-check the amounts reported to avoid discrepancies that could trigger an IRS audit.
For Institutions Issuing 1099-INT Forms:
- File Copy A with the IRS and Copy B with the recipient by January 31st.
- Use IRS e-filing services or tax software for submission.
Individuals who have received multiple 1099-INT forms from different institutions must ensure they properly consolidate and report all interest income. If you notice any errors on your form, contact the issuing institution immediately to request a correction.
Common Mistakes & How to Avoid Them
- Failing to report interest income: Even if a 1099-INT is not received, all taxable interest must be reported.
- Confusing taxable vs. tax-exempt interest: Misclassification can lead to errors on your tax return.
- Not reporting foreign interest income: Interest earned from foreign banks is still taxable in the U.S.
- Overlooking backup withholding: If a taxpayer does not provide a correct W-9 form, the IRS may require withholding on interest payments.
- Not keeping track of interest income from multiple accounts: If you hold accounts at multiple institutions, you must ensure all interest income is accounted for.
The IRS cross-references information reported on 1099-INT forms with individual tax returns. Any discrepancies may lead to penalties or further investigation.
When Is the 1099-INT Deadline?
- Due to recipients by: January 31st
- Paper filing deadline to IRS: February 28th
- Electronic filing deadline to IRS: March 31st
Missing these deadlines can result in penalties for financial institutions. Individuals should check their mail or online banking portals in early February to ensure they receive all necessary tax documents.
Conclusion
The 1099-INT form plays a vital role in reporting interest income for tax purposes. Understanding how to file it correctly ensures compliance with IRS regulations and avoids penalties. Check your accounts to see if you received a 1099-INT, even if the interest earned is minimal.
Properly reporting interest income is essential to avoiding tax complications. Whether you earn a few dollars in interest or a significant amount, ensuring accurate reporting will help you stay compliant with IRS regulations.
If you have multiple sources of interest income or international investments, consider consulting a tax professional to navigate any complexities. Additionally, using IRS-approved tax filing tools can simplify the reporting process and reduce errors.For more details, visit the IRS website or consult with a tax expert to ensure you are meeting all necessary tax obligations.