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This article was fact-checked by our editors and a member of the Credit Karma Tax® product specialist team, led by Senior Manager of Operations Christina Taylor.
Generally, the IRS expects you to report all your income, including interest you may have earned from investments or bank accounts. And if your money earns enough interest in a tax year, you’ll likely receive a Form 1099-INT.
When it’s time to file your federal income tax return, you’ll need that 1099-INT to help you accurately report all the income you may need to pay tax on for the year.
Let’s look at the information that’s on a 1099-INT, instances when you may get the form and what you should do with any 1099-INTs you receive.
- What is Form 1099-INT?
- What information is on a 1099-INT?
- What is tax-exempt interest and where does it get reported?
- What should I do with Form 1099-INT?
- What if I don’t get a 1099-INT for interest I’ve earned?
Most types of income are taxable — unless tax law specifically says it’s not — and you’re expected to report all your taxable income on your federal income tax return each year. That means money you earn from investments or financial accounts can also be taxable. But some types of interest can be tax-exempt.
When you receive $10 or more of taxable interest, you should also get a 1099-INT from the entity that paid you the interest.
Sources of taxable interest can include …
- Dividends from a bank account, money market account, certificate of deposit (or CD), corporate bond or deposited insurance
- Interest from treasury bills, notes and bonds
- Certain interest from Series EE and Series I U.S. Savings Bonds when these bonds mature, are redeemed or are disposed of
A 1099-INT can help ensure you accurately report all the income you may have to pay tax on.
The 1099-INT is a short form as IRS tax forms go. When an entity is required to issue this form, it must provide three copies — one to the IRS, one to the individual receiving the interest, and one to the state tax department.
On the left side of the Form 1099-INT are boxes for …
- The name, address and taxpayer identification number, or TIN, of the entity that made the interest payment
- The name, address and TIN of the individual who received the interest payment
- An account number used to distinguish the recipient’s account
Numbered boxes appear on the right side of the form. Box-by-box, here’s the information they include.
- Box 1: Interest income of $10 or more, in most cases (but the reporting threshold is $600 or more for certain types of payments, like interest on delayed death benefits from a life insurance company)
- Box 2: Early-withdrawal penalty (if any) — for example, if you withdrew money from a CD before its maturity date and paid a penalty for doing so
- Box 3: Interest on U.S. Savings Bonds and Treasury obligations
- Box 4: Federal income tax withheld (if any)
- Box 5: Investment expenses
- Box 6: Foreign tax paid
- Box 7: Foreign country or U.S. possession that foreign tax was paid to
- Box 8: Tax-exempt interest
- Box 9: Specified private activity bond interest
- Box 10: Market discount
- Box 11: Bond premium
- Box 12: Bond premium on Treasury obligations
- Box 13: Bond premium on tax-exempt bond
- Box 14: Tax-exempt and tax credit bond CUSIP number
- Box 15: State
- Box 16: State identification number
- Box 17: State tax withheld (if any)
In some cases, your 1099-INT may be part of a composite 1099 statement from a broker. If you receive interest income from more than one financial institution, you should receive more than one Form 1099-INT.
You’ll notice there’s a box on the 1099-INT to report tax-exempt interest. “Tax-exempt interest” is a type of interest that you don’t need to include in your taxable income. You may still need to report it on your tax return, though.
Here are three examples of interest that’s likely tax-exempt on your federal income tax return.
1. Series EE and Series I U.S. savings bonds that are issued by the federal government after 1989 — but the interest is exempt only if you used it to pay for qualified higher-education expenses, and you’ll need to meet other requirements for the Educational Savings Bond Program
2. Interest on some bonds used to finance state, District of Columbia or U.S. possession government projects
3. Interest on insurance dividends on deposit with U.S. Department of Veterans Affairs
When you’re ready to file your tax return, make sure you have all your 1099-INT forms on hand.
On Line 2a of Form 1040, you’ll report all tax-exempt interest included in Box 8 of Form 1099-INT.
On Line 2b of Form 1040, you’ll report all taxable interest income included in Box 1 and Box 3 of the 1099-INT. But in some cases, you may have to itemize each payer, along with the amount of interest paid, on Schedule B. For example, you’ll have to include Schedule B with your tax return if you received more than $1,500 of taxable interest or ordinary dividend income, or received interest from a seller-financed mortgage and the buyer used the property as a personal residence.
Also, if you received interest income from another source and didn’t receive a 1099-INT because the amount was less than $10, be sure to include that in your taxable interest shown on Line 2b.What counts as taxable income?
If an issuer is required to file a 1099-INT with the IRS, it’s also required to furnish a copy to the recipient of the interest payment. But if you don’t get a 1099-INT and should have, you’re still expected to report the interest and pay any tax that may be due on it. And if you don’t get a 1099-INT because you gave the payer an incorrect TIN, you could face an IRS penalty.
If you didn’t receive a 1099-INT but should have, check to see if you can download the form from your financial institution’s website. But know that it’s not necessary to actually have the form to file your return and report the interest — you just need to know how much to report. And you can usually find out your exact interest earnings by checking your year-end account statement or calling the financial institution.
Making money from your investments is a good thing, as long as you don’t forget to pay federal income tax on all your taxable interest income.
If you receive a 1099-INT, make sure you carefully enter each line into your tax-filing software. Preparing your return accurately can help you avoid paying taxes on income that’s supposed to be tax free.
Relevant sources: IRS: About Form 1099-INT, Interest Income | IRS: What Is Taxable and Nontaxable Income? | IRS: Topic No. 403 Interest Received | IRS: Form 1099-INT | IRS: Instructions for Forms 1099-INT and 1099-OID | IRS: Instructions for Form 1040 and 1040-SR
Christina Taylor is senior manager of tax operations for Credit Karma Tax®. She has more than a dozen years of experience in tax, accounting and business operations. Christina founded her own accounting consultancy and managed it for more than six years. She codeveloped an online DIY tax-preparation product, serving as chief operating officer for seven years. She is the current treasurer of the National Association of Computerized Tax Processors and holds a bachelor’s degree in business administration/accounting from Baker College and an MBA from Meredith College. You can find her on LinkedIn.