How to File Form 1099-INT on Your Tax Return

Form 1099-INT is an IRS tax form used to report interest income. Financial institutions issue this form to individuals who earned at least $10 in interest during the tax year. The IRS also receives a copy, making it important for accurate tax filing. This form details interest earned and any taxes withheld, which must be reported on your federal income tax return.

Understanding Your 1099-INT Form

Understanding your Form 1099-INT is important before filing taxes. The form includes various boxes, each reporting a specific type of interest or related amount. Box 1, “Interest Income,” reports your total taxable interest, such as earnings from savings accounts. This amount generally includes interest of $10 or more.

Box 2, “Early Withdrawal Penalty,” shows any interest or principal you forfeited due to withdrawing funds from a time deposit, like a Certificate of Deposit (CD), before its maturity date. Box 3, “Interest on U.S. Savings Bonds and Treas. Obligations,” reports interest from U.S. Treasury bills, bonds, notes, and savings bonds. This interest is taxable at the federal level but exempt from state and local income taxes.

Box 8, “Tax-Exempt Interest,” indicates interest income not subject to federal income tax, often from municipal bonds. You must still report this amount on your tax return. Box 9, “Specified Private Activity Bond Interest,” is a subset of Box 8 and may be subject to the Alternative Minimum Tax (AMT).

If you do not receive a Form 1099-INT by early February, or if you believe the information on the form is incorrect, you should contact the payer directly. Even if you do not receive a 1099-INT, you are still required to report all interest income earned. If there is an error, the payer can issue a corrected Form 1099-INT.

Reporting Interest Income on Your Tax Return

After reviewing your Form 1099-INT, accurately report the interest income on your tax return. For most taxpayers, taxable interest income from Box 1 of Form 1099-INT is reported directly on Form 1040, on Line 2b. Tax-exempt interest from Box 8 is reported on Line 2a of Form 1040, even though it is not subject to federal income tax.

You will need to file Schedule B, “Interest and Ordinary Dividends,” if your total taxable interest income exceeds $1,500. Schedule B is also required if you received interest from a seller-financed mortgage, accrued bond interest not reported on a 1099-INT, or if you had a financial interest in or signature authority over a foreign financial account. This schedule provides a detailed breakdown of each payer and the amount of interest received.

When using tax preparation software, you will typically be prompted to enter the information from your 1099-INT directly into the program. The software then automatically populates the correct lines on Form 1040 and determines if Schedule B is necessary. If you are preparing your return manually, you will transfer the totals from your 1099-INT(s) to the appropriate lines on Form 1040 or Schedule B. It is important to ensure consistency between your 1099-INT forms, Schedule B (if applicable), and your final Form 1040.

Specific Interest Income Scenarios

Beyond standard taxable interest, certain specific scenarios require attention. Tax-exempt interest (Box 8) must be reported on Line 2a of Form 1040 for informational purposes and may be considered for certain tax calculations. Interest from private activity bonds (Box 9) can be subject to the Alternative Minimum Tax (AMT).

Early withdrawal penalties (Box 2) represent amounts forfeited when funds are withdrawn from a time deposit before maturity. These penalties are deductible, even if they exceed the interest income earned on the account. This deduction is taken as an adjustment to income on Schedule 1 (Form 1040).

In some cases, you might receive a Form 1099-INT for interest that actually belongs to another person. This is known as “nominee interest.” If you are a nominee recipient, you must report the full amount shown on the 1099-INT on your return and then deduct the portion that belongs to the actual owner. You also need to issue a new Form 1099-INT to the actual owner.

Interest from foreign accounts introduces additional reporting requirements. If you have a financial interest in or signature authority over foreign financial accounts, and the aggregate value of these accounts exceeds $10,000 at any time during the calendar year, you must file a Foreign Bank Account Report (FBAR), FinCEN Form 114.

Additionally, if you meet certain thresholds for specified foreign financial assets, you may need to file Form 8938 with your tax return.