A 1099-INT form is a tax form which is a record of a person or an entity, like a bank or others, having paid you interests during a tax year. This is an Internal Revenue Service (IRS) tax form. If you have earned more than $10 in interest from a bank, brokerage or other financial institution, and not your employer, you will receive this form.
The 1099-INT form is a rather common type of IRS form. If your bank has paid you interest during the year, you will receive this form from your bank. The idea is that any interest you earn from any financial institution is a part of your taxable income and has to be included when you file your tax return.
The 1099-INT form includes your Social Security Number or taxpayer identification number, which means that the IRS knows of your income from investments.
If you are eligible for it, you will receive the 1099-INT form around February in your mail. You might receive more than one of these forms, depending on how many sources you have earned interests from. One copy of this form goes to the IRS, and one to the taxpayer.
But you need to remember that just because you received this form, it does not necessarily mean that you owe taxes on this amount. You might have deductions that cover a part of this income from interests or all of it.
How does Form 1099-INT work?
The 1099-INT form lets the state tax departments and IRS know how much interest you received during a tax year. There are other forms of 1099 income too that you earn, all of which, along with your wages, become your taxable income.
What sections does a Form 1099-INT contain?
If you are a tax-paying individual, you do not have to file the form. You just have to fill out certain sections of it. A Form 1099-INT contains the following sections:
A Form 1099-INT contains all of the relevant information about the entity who is paying the interest. It contains the payer’s name, street address, ZIP code, city, state, country, and telephone number, and also the taxpayer identification number (TIN) on the form.
In most cases, the payer already has the recipient’s information and all important details. Just imagine a scenario where you are opening a new bank account. In that case, the bank will have all your necessary information. They do that so that they can issue the 1099-INT form correctly and on time.
The recipient’s information also contains the same details of the individual, such as, name, address, city, state, street name, ZIP code and TIN. The payer may also list the account number of the recipient in some cases.
This box states the amount of interest earned by the individual that’s taxable. This box includes amounts of $10 or greater that you receive in your deposits, savings account, dividends received from a life insurance company, and other forms of other interest.
Early withdrawal penalty
The second box of the form contains the principal or the penalty amount charged due to early withdrawal of funds. The amount reported in the first box is not affected or reduced due to this deductible penalty. In fact, this penalty is deductible from the gross income of the recipient of this form.
Interest on U.S. Savings Bonds and Treasury Obligations
In the third box of Form 1099-INT, the amount of interest earned on certain bonds, Treasury bills and notes, and Treasury bond securities issued by the U.S. government is reported.
Federal Income Tax Withheld
This box in Form 1099-INT reflects how much taxes have been withheld from interest payments. A taxpayer needs to furnish their individual TIN on time when requested, or else they will have a part of their interest earned withheld from their payment. However, the rate of withholding that’s applicable will vary.
Other boxes of Form 1099-INT
One of the most common boxes of Form 1099-INT is Box 8, which deals with the amount of tax-exempt interest. This category of interest is mostly earned from the obligations issued by a state or other governmental entity. This interest earned is not taxable and does not get included in the taxpayer’s gross income.
Form 1099-INT has a total of 17 boxes. Many of these boxes have very specific purposes. While as a taxpayer, you mostly have to fill up the recipient’s information box, but if you receive a Form 1099-INT containing information in any of the other boxes, you could consult a local tax advisor who will guide you on the matter.
These other boxes on Form 1099-INT deal with areas dealing with private activity bond interest, foreign taxes, market discounts, and other tax-exempt investments. Boxes 15, 16, and 17 are for the taxpayers who take part in the combined Federal/State Filing Program to provide state tax information.