How to Report a 1099-INT on Schedule B

Receiving a Form 1099-INT in the mail signifies that you have earned interest income, a common occurrence for anyone with a savings account, certificate of deposit, or certain brokerage accounts. This form is an official record from a payer, like a bank or financial institution, detailing the amount of interest they paid you during the tax year. The information on this document is also reported to the IRS.

When you receive one or more of these forms, you may need to use another IRS form, Schedule B (Form 1040), Interest and Ordinary Dividends, to report this income on your tax return. This schedule serves as a detailed ledger for all your interest and dividend income sources.

Understanding Form 1099-INT

Form 1099-INT is an information return sent by any entity that pays you $10 or more in interest income during a calendar year. Financial institutions like banks, credit unions, and brokerage firms are the most common issuers of this form. You will receive a separate 1099-INT from each institution that paid you interest.

The form contains several boxes that are important for most taxpayers:

• Box 1, “Interest Income,” shows the total taxable interest you received from the payer. This amount is fully taxable at your ordinary income tax rate.
• Box 3, “Interest on U.S. Savings Bonds and Treasury obligations,” reports interest from federal government debt, which is taxable on your federal return but generally exempt from state and local taxes.
• Box 4, “Federal income tax withheld,” shows if any amount was withheld from your interest payments for taxes. This can happen under backup withholding rules if you did not provide a correct taxpayer identification number to the payer.
• Box 8, “Tax-exempt interest,” reports interest that is not subject to federal income tax, such as interest from municipal bonds. While not federally taxed, this amount may still need to be reported on your return as it can affect other calculations.

Determining the Need to File Schedule B

Not everyone who receives a Form 1099-INT must file Schedule B. The primary trigger for this requirement is an income-based threshold set by the IRS. If your total taxable interest income from all sources is more than $1,500, you are required to file Schedule B. This $1,500 total also includes any ordinary dividend income you may have received, which is reported on Form 1099-DIV.

Even if your interest and ordinary dividend income do not exceed the $1,500 threshold, other circumstances can necessitate filing Schedule B. You must file Schedule B if you had a financial interest in or signature authority over a financial account located in a foreign country. This requirement applies regardless of the account’s value unless it meets specific exceptions. Another trigger is if you received a distribution from, or were the grantor of, or a transferor to, a foreign trust. Answering “yes” to any of the questions in Part III of Schedule B means you must file the schedule.

How to Complete Schedule B with Form 1099-INT Information

Once you determine that you must file Schedule B, the process involves transferring information from your Form 1099-INT documents. The schedule is divided into three parts, but your primary focus for interest income will be Part I. Here, you must list the name of every payer who sent you a Form 1099-INT and the corresponding interest amount shown in Box 1 of each form.

For each Form 1099-INT you received, you will create a separate entry on Line 1 of Schedule B. Write the payer’s name on the line provided and enter the taxable interest amount from Box 1 in the column to the right. If you have more payers than the space allows on the form, you would attach a separate statement with the additional names and amounts. After listing all your individual interest income sources, you will sum them up and enter the total on Line 2.

Part II of Schedule B is designated for reporting ordinary dividends, and Part III contains the questions regarding foreign accounts and trusts.

After completing all applicable parts of Schedule B, the final step is to transfer the total interest income to your main tax form. The amount from Line 2 of Schedule B is carried over to the “Taxable interest” line on Form 1040.