Mastering Form 1099-INT: The Essential Guide

Form 1099-INT is an official IRS document to report interest payers or businesses made to eligible recipients. This form is sent to the IRS during the tax year, as well as any applicable states and individuals for their records. Form 1099-INT is completed by the business/entity whom paid out the interest, not by the recipients.

What is IRS Form 1099-INT?

Form 1099-INT, Interest Income, is used by entities that pay interest income to account holders throughout the year. The account holders, or taxpayers, will then use the form in their personal filing. With a low interest income threshold of $10, payers must issue a 1099-INT form to all parties from the previous tax year that exceed the threshold.

Tax Year 2021 will be the last year in which the form will be year-specific. Based on the most recent revision of Form 1099-INT, filers will now have to enter the tax year on their own. If the business or entity needs to file for a previous year, they can use the year-specific Form

IRS Form 1099-INT Copy A
Image of Form 1099-INT Copy A

What’s the differences between Forms 1099-INT and 1099-OID?

The difference between Forms 1099-INT and 1099-OID is subtle, but important.

Form 1099-OID, Original Issue Discount (OID), is issued when OID amounts are more than $10 annually. An OID amount is the difference between the original price and the discounted price paid for a bond or other obligation, such as the following:

  • Bonds
  • Debentures
  • Note certificates
  • Evidence of other debts with a term of more than a year.

Even though OID is considered interest income it’s reported on a different form, because it’s a special type of interest. Someone might receive a Form 1099-OID in this  scenario: selling bonds for a lower price while waiting for them to mature to its full price.

What information is required to file 1099-INT?

The information required for preparing Form 1099-INT includes the taxpayer names, addresses, and the identification numbers for the reporting business (“payer”) and the recipient (“payee”), as well as the amounts paid to the recipient. For more information about what is required from the “payer” and “payee,” check out Gathering Information to Prepare Form 1099-INT.

What are the boxes included in Form 1099-INT?

Form 1099-INT has a decent amount of reportable information with over 10 boxes that can be filled out. Of course, this does not mean all the boxes are going to have amounts entered in every scenario. These reportable boxes will be asking for dollar amounts on the following:

  • Interest income
  • Early withdrawal penalty
  • Interest on US saving bonds
  • Federal income tax withheld
  • Investment expenses
  • Foreign tax paid
  • Tax-exempt interest
  • Market Discount
  • Bonds

What types of interest are excluded from reporting?

Filers are not required to report interest on Form 1099-INT when interest is:

  • Issued by an individual
  • Has come from sources outside of the United States
  • A specific type of portfolio interest
  • Issued by an organization outside of the United States
  • Earned from payments made to international payees or international beneficial owners

Who must file Form 1099-INT with the IRS?

Form 1099-INT is filed by the business or entity that pays interest out of the following:

  • Investment Firms
  • Mutual Funds Brokerages
  • Banks Investment firms
  • Brokerages

These types of entities must distribute Forms 1099-INT when they withhold federal income tax and do not refund the amount.

Who must file Form 1099-INT with the state??

If the employer chooses to e-File using the IRS FIRE (Filing Information Returns Electronically) system and enroll in the Combined Federal/State Filing (CF/SF) Program, any applicable forms will be forwarded to the corresponding states.

Even though some states are in the CF/SF program, additional action may still be required from the business. We recommend double checking the state of business to avoid that surprise penalty.

If the employer chooses to paper file, then they cannot utilize the CF/SF program. In this case, the employer must verify reporting requirements with the state to ensure that these are met. 

Be sure to verify that your state of business supports the CF/SF program for this form type, and always check for any additional action needed to meet state requirements.

Who receives 1099-INT forms?

There are specific requirements for who should receive a 1099-INT. According to the IRS, there are three criteria for determining this:

  • To whom you paid amounts reportable in boxes 1, 3, or 8 of at least $10
  • From whom you withheld and paid any foreign tax or interest
  • For whom you withheld (and did not refund) any federal income tax under the backup withholdings rules, regardless of the amount of the payment.

A common situation where an individual might receive Form 1099-INT is when they have a savings account. Every month, that savings account earns interest. If, at the end of the year, the savings account has gained over $10 in interest, the bank will be required to issue a Form 1099-INT to the account holder.

If you’d like more information on this topic, we have a great article that gives a deeper understanding of Who Receives a Form 1099-INT.

Are there any exceptions to filing Forms 1099-INT?

In the case of payments made to exempt recipients, no Form 1099-INT is required to be filed.

Recipients who are exempt from receiving Form 1099-INT for payments may include, but are not limited to:

  • Corporations
  • Tax-exempt organizations
  • Individual retirement arrangements (IRAs)
  • Archer medical savings accounts (MSAs)
  • Medicare advantages
  • Health savings accounts (HSAs)
  • U.S. agencies
  • States
  • The District of Columbia
  • U.S. possessions
  • Registered securities or commodities dealers
  • Nominees or custodians
  • Brokers
  • Notional principal contract (swap) dealers

In addition, filers are not required to report tax-deferred interest that is earned but not distributed from an IRA.

Can I submit a paper filing to the IRS?

Employers may choose to paper file their Form 1099-MISC filing to the IRS if their total form count is less than the 250-form threshold.  E-Filing is encouraged by the IRS, but if you have less than 250 forms to file, then paper filing is an option.

When choosing to mail in forms, make sure to include an IRS Form 1096 as the transmittal/cover sheet and only Copy A of the Forms 1099-MISC. If you are wondering why there are so many copies, but only Copy A gets sent to the IRS, check out our article, File and Distribute Form 1099 to learn more.

Determining where to send your filing isn’t a one-stop distribution. The mailing address is dependent upon the filer’s address; specifically, the state. Find your state in the graphic below for the correct IRS mailing address for your filing.

Mail In Form 1096 & 1099 by State
IRS Addresses for Paper Filing Form 1096 & 1099

If you have any questions about completing the transmittal, Form 1096, be sure to review our essential guide: Mastering Form 1096. Our series of essential guides will help you to master any forms you have questions or uncertainties about.

How is the mailable 250-form threshold calculated?

Businesses reporting less than 250 forms may opt to mail in Copy A directly to the IRS. It’s important to note that paper filing is a slower process, while e-Filing is much faster AND recommended by the IRS.

The 250-form threshold applies to each form type separately. For example, a business filing 200 Forms 1099-MISC and 200 Forms 1099-A will still fall under the 250-form threshold, because each type is counted independently. However, if one type of form is above the 250-form threshold, then that type must be sent electronically.

Similar to how the 250-form threshold is calculated, no form type shares the same cumulative form counts – even original forms and corrections are counted separately. For example, a business that reported 500 Forms 1099-MISC is required to e-File because the form count is over 250. Considering that an e-File has a quicker turnaround time, the IRS may return 50 forms that need a correction. In this case, the business may choose to file these 50 corrections via mail, because these 50 forms now fall under the 250-form e-File threshold.

Although, it’s important to note that the IRS generally recommends filing the corrections using the same medium as the original forms. If you e-filed the original forms, then you should e-file the corrections and vice versa if the original forms were paper filed.

When a business files electronically, it will typically use the same software provider that filed the originals, since corrections are usually included in the initial fee. On top of this, opting to mail in corrections comes with its own obstacles and requirements, and it is not recommended by BoomTax or the IRS.

IRS Mail in Threshold
How to calculate IRS mail in threshold

What are the paper filing form requirements?

The following is a short list of requirements for filing via mail:

  • Handwritten forms are accepted but must be legible for machine processing
  • Data must be in the middle of blocks
  • Do not use “$” for reporting amounts
  • Do not use “0” or “None” for blank reporting
  • Do not staple or fold forms

Please note that this is just a sample. There are entire publications filled with requirements that businesses must follow when filing forms with the IRS. Paper filing can be cumbersome, so we recommend finding an e-Filing software provider.

Due to the extensive requirements that must be followed for the filing to be accepted, we do not recommend sending forms by mail.

Can I download Form 1099-INT?

If you are looking to download a copy of the form to distribute to your recipients, then yes, you can download a PDF version of the form from the IRS website. This copy can be completed and printed out to furnish to recipients.

However, this PDF copy is not sufficient for paper filing. When submitting a paper filing, the forms are scanned by a machine which requires that the actual form meet certain requirements, such as being printed with special red ink. In order to satisfy IRS form requirements, we recommend ordering forms directly from the IRS. Using unofficial forms can result in fines and penalties against the business, even if the filing was mailed on time with accurate information.

Can I submit an electronic filing to the IRS?

Yes, you can. Not only do we recommend it, but it is encouraged by the IRS. Some of the benefits include immediate submission, quick turnaround, and updates along the way. After a certain threshold, it becomes a requirement for an employer to e-File with the IRS.

The threshold for this is 250 forms. After this, employers can no longer mail in their filing and instead are required e-File to satisfy IRS requirements.

What are the 1099-INT deadlines?

Traditionally, the filing deadlines for 1099-INT are as follows:

  • Furnish Recipient Copies – January 31st
  • Submit a Paper Filing – February 28th
  • Submit an Electronic Filing – March 31st

If these deadlines fall on a weekend or legal holiday, then the due date is typically the following business day. Check out our annually updated deadlines article for the most up-to-date information.

An individual expecting to receive Form 1099-INT should expect to receive it by or before January 31st. If an individual does not receive their form by this date, they should contact the responsible entity to get this resolved as quickly as possible as the IRS deadline has already passed. This form is also crucial for reporting on personal tax statements for IRS Form 1040.

What are the penalties for filing Form 1099-INT late?

Any type of official form being sent to the IRS is definitely going to be tracked for their records. In order to make sure businesses do not disregard their obligation, the IRS will issue fines and penalties for employers who miss the deadline. Be aware that should any of the deadline dates fall on a weekend or holiday, the deadline is postponed until the following business day.

Check out the graphic below to see how quickly fines can accumulate based on a small sample size of only 10 forms the business should have filed.

IRS Failure to File Graph
IRS Failure to File Fine Amount

How can I make a correction to Form 1099-INT?

Even with careful combing of each individual form, mistakes can happen. No matter the case, there is an easy way to make corrections to Form 1099-INT:

  • If you submitted your original filing electronically, then you should edit your filing accordingly with the original vendor.
  • If you submitted your original filing via mail, then you should complete a new form and include the updated information.
  • Once this has been completed, simply check the “Corrected” box at the top of the form. Always include a new Transmittal Form 1096 when mailing in corrections to the IRS.

Employers must give the recipient an updated copy of this form by mail or e-Delivery to keep for their records.

Conclusion

Once you have submitted these forms to the IRS, either electronically or via mail, and have received your “Accepted” status, then you have met all of the IRS requirements for these forms.

If you’re looking for a broken-down Understanding Form 1099-INT guide in a downloadable format, make sure to download our PDF guide.

BoomTax, The Boom Post, and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors prior to engaging in any transaction.

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