Form 1099-INT Basics

The IRS Form 1099-INT (Interest Income) is used by banks, financial institutions, and other entities to report interest income paid to their customers during the tax year.

In general, if the account holder receives $10 or more in interest income, the payor must file Form 1099-INT and provide the recipient with a copy.

Sample Video Tutorial for 2023

The topic covered in this video tutorial and blog post covers Form 1099-INT and how to report interest income on Form 1040 (US Individual Income Tax Return) for the 2023 tax year.

In this example, the taxpayer receives a Form 1099-INT from his brokerage company, which reports $209 of taxable interest income in Box 1. He attaches a Schedule B to Form 1040 and reports the interest income in Part I (Interest Income).

The total interest income form Schedule B flows to Line 2b on Page 1 of his Form 1040. Notice how the interest is reported in Line 2b because it is taxable interest income. Line 2a reports tax-exempt interest income, such as interest from municipal bonds.

Schedule B Form 1040

In general, Schedule B is usually only required if the taxpayer has greater than $1,500 of taxable interest and dividend income, or the taxpayer has an interest in a foreign trust or financial account which requires disclosure in Part III (Foreign Accounts and Trusts). Instead, the taxpayer can report the interest income directly on Form 1040 Page 1 and omit Schedule B.

In this example, the taxpayer chose to voluntarily include Schedule B even though it was not required. The Schedule B instructions can be found here.

Key Elements on Form 1099-INT for 2023

Box 1: Interest Income: The gross taxable interest income received during the calendar year.

Box 2: Early Withdrawal Penalty: Penalties charged to the account holder for the early withdrawal of certain types of savings accounts, such as certificates of deposit.

Box 3: Interest on U.S. Savings Bonds and Treasury Obligations: Taxable interest from U.S. Treasury bonds, bills, notes, and savings bonds. Federal interest income is subject to federal income taxes; however, it is generally exempt from state income taxes.

Box 4: Federal Income Tax Withheld: Any federal income tax withheld under the backup withholding rules under IRC Section 3406.

Box 6: Foreign Taxes Paid: If the amount of interest income includes any foreign source interest income that was subject to foreign withholding taxes, the foreign tax withheld is generally passed to the account holder and can be used as a foreign tax credit (FTC). FTC for individuals is reported on Form 1116 (Foreign Tax Credit).

Box 8: Tax-Exempt Interest: Interest income that is exempt from federal income tax, such as municipal bond interest income. Although the interest may be exempt from federal income taxes, it may be subject to state income taxes, depending upon your residency.

Box 9: Specified Private Activity Bonds Interest: The amount in Box 9 represents the portion of tax-exempt interest income that is private activity bond (PAB) interest income. PAB interest income is subject to special tax rules for alternative minimum tax (AMT) purposes.

Box 11: Bond Premium: The bond premium amortization on tax-exempt bonds.

Box 15: State: The state abbreviation in Box 15 indicates which state issued the municipal bonds reported in Box 8. This information is important for residents of states that impose income taxes.

Other Helpful Resources

Additional Information on Interest Income

Taxpayers can find more information on the IRS website regarding Form 1099-INT.