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1099-INT Instructions & Complete Box Breakdown for 2025

1099-INT intructions

Income interests may look small, but IRS tracks every penny. Interest income of more than $10 from banks, brokerage firms, and credit unions require the 1099-INT reporting.

According to IRS, the financial entities should issue Form 1099-INT to the recipients (or investors) and send a copy to IRS as well. However, there are certain exemptions that you should know before issuing the Form 1099-INT.

Also, inaccurate reporting may lead to CP2100 “mismatch” letters that force extra paperwork and 24 % withholding on future payments.

You might be having various questions such as: How to file Form 1099-INT? What tax exemptions are there in Form 1099-INT filing? What is the 1099-INT filing deadline?

In this post, we’ve talked about the Form 1099-INT instructions, penalties, and a box-by-box breakdown of these instructions.

What is 1099-INT?

IRS Form 1099-INT is a tax form that reports the interest income paid by financial institutions such as banks, brokerage firms and bond trustees to the investors. The main purpose of this form is to gather the total amount of interest earned by the recipients from various sources throughout the tax year.

Now, the question arises: Do payments made to corporations require 1099-INT reporting?

Yes. Payments made to some corporations like individuals and partnership firms require Form 1099-INT filing. However, there is no broad corporate exemption unlike the form 1099-NEC requirements.

Who Must File Form 1099-INT?

Interest income paid to taxpayers should be reported for:

  • Interests on bank deposits
  • Dividends earned by life insurance companies
  • Indebtedness filed through a form or offered to public such as bonds, currencies and debentures other than offered by U.S. treasury
  • Amounts withheld as federal tax or a foreign tax.
  • Interest of $10 accrued by a real estate mortgage investment conduit (REMIC), or
  • Financial asset securitization investment trust (FASIT) regular interest holder.

Penalties for Missed, Late or Incorrect 1099-INT Filing:

If the payer incorrectly files 1099-INT form, does not report it or files it late, they will be charged with a penalty. The amount of penalty depends on the date when you file the information from the date of deadline.

A general deadline for filing Form 1099-INT is January 31, 2026. However, the deadlines might be different for e-filing, and paper deposits or shift because of holidays.

The table below shows the penalties for missed or late 1099-INT filing:

1099-INT Filing Timeline Due Date (to be filed in 2026)
Deliver Recipient copies Feb 2, 2026
(Original due date: Jan 31)
Paper filing March 2, 2026
(Original due date: Feb 28)
E-filing March 31, 2026

A Quick Checklist of When To File Form 1099-INT

Payers must report 1099-INT filing for payments made to payee in certain cases. You must file Form 1099-INT when you:

  • Pay any amount of $10 or greater paid to individual’s bank accounts, bank deposits, or dividends by insurance companies. Use box 1 for any interest of $600 or more in course of trade or business.
  • Report amount of principal or interest forfeited because of early withdrawal of time deposits. The forfeiture is not deducted from the amount reported in Box 1. Instead, the forfeiture is deducted from the gross income of the recipient.
  • Report the interest on U.S. Savings Bonds, Treasury bills, Treasury notes, and Treasury bonds by the U.S. government.
  • Withold any tax for the payee. If a taxpayer does not furnish the TIN as requested, a part of their interest is withheld from payments to be reported in Box 1, Box 3 and Box 8 of the form.

There are other special triggers that tick marks these boxes. The below table gives insight into each trigger and what it means:

Special triggers Explanation Where to Report on 1099-INT Tips to Avoid Mistakes
Imputed Interest You lent money at little or no interest (e.g., 0% seller-financed mortgage). The IRS applies a market rate (AFR) and treats that as interest income. Box 1 once total reaches $10 or more Keep a record of AFR calculations to show how you arrived at the imputed interest amount.
Market-Discount Accrual You sold a bond before maturity; part of the sale price is treated as interest rather than gain. Broker reporting determines box placement. Box 1 or Boxes 5/11 Verify broker statements and ensure totals tie to reported amounts.
Crypto Lending Interest You earned interest through a crypto lending platform. It is still considered ordinary interest under IRS rules. Convert crypto to USD at payment date. Box 1 Use correct USD conversion rate from the payment date and keep documentation.

Quick Reminder: Form 1099-INT filing threshold is only set for the payer (banks, insurance companies.) Payee must still report all the interests they earn on Schedule B, even if amounts less than $10.

Form 1099-INT Filing Instructions: Box-by-Box Breakdown

Before you start filling form 1099-INT, you must know which box to fill out. Incorrect 1099-INT reporting can lead to hefty penalties. Below, we’ve given a box-by-box breakdown and the common pitfalls that you should avoid while filing the box.

Box What to Report Common Pitfalls Fix-It Tip Filing Threshold
(1) Interest Income Bank deposits, CD, money-market interest, savings account Misclassifying accrued OID as interest Use 1099-OID when applicable $10 or more (aggregate per recipient)
(2) Early-Withdrawal Penalty Forfeited interest on deposits Reporting net interest instead of penalty Show gross interest in Box 1, penalty here No minimum report
(3) U.S. Savings Bonds & Treasury Interest U.S. Savings Bonds, Treasury bills, Treasury notes, and Treasury bond Forgetting state-tax exemption note Provide footnote to payee $10 or more
(4) Federal Income Tax Withheld 24% backup or FATCA withholding Removing withholding code in payer system Sync withholding module Any amount (even under $10)
(5) Investment Expenses Investment expenses from a single class REMIC Classifying it as deductible expense Any amount
(6) Foreign Tax Paid Interest received in foreign jurisdictions Using wrong currency conversion Convert amount to US dollars Any amount
(8 & 9) Tax-Exempt & Private-Activity Bond Interest Municipal bond funds Reporting as Box 1 creates double tax Cross-check CUSIP lists $10 or more
10–13 Bond Premium, Market Discount & Investment Expenses Amount of market discount or bond premium interest Omitting when broker elected to adjust basis Confirm Form 8949 tie-out Any amount if applicable

How to File Form 1099-INT?

Here’s a step by step process to file form 1099-INT. Use this workflow to avoid incorrect filing:

  • Collect & Validate: Collect the recipient’s W-9 form which contains their name, address, and Taxpayer Identification Number (TIN). Now, use this information to validate with IRS TIN matching system. Check the recipient’s FATCA status to confirm if they hold any foreign assets outside the U.S.
  • Aggregate & Classify: Now, aggregate the total payments made to each recipient during the financial year. Using this record, assign the correct boxes in the Form 1099-INT. To do this, pull the payment from you. r bank accounting system and classify interest paid to each recipient.
  • Review & Reconcile: A mismatch between the bank account system and IRS records can result in discrepancies. Hence, it is essential to review each IRS record. To do so, match each box’s total to the relevant interest expense account in your general ledger. Next, run a duplicate TIN report to ensure that you’re not sending duplicate Form 1099-INT.
  • Transmit the copies: After the reporting, you must send two copes; one to recipient and other to IRS. The due date to send recipient copy by postmark is January 31, 2026. Also, the completed paper IRS form must reach IRS by Feb 28,2026 and the due date for e-filing with IRS is March 31, 2026.
  • Monitor Acks & Correct: After filing, the IRS sends you a status of the form – Accepted or Rejected. If your form gets rejected, make sure to fix it quickly to avoid penalties. Check your status next day after submitting the form. If you spot a mistake after filing, submit a CORRECTED 1099-INT within 30 days.
  • Archive: We’ll also recommend you to keep a documented record of 1099-INT forms as PDF or CSV. Keep all the documentations such as general ledger reports, W-9s, and calculation worksheets for a minimum period of four years.

Pro tip: Keep your document in an encrypted system to protect taxpayer data.

Frequently Asked Questions:

      1. Do I file 1099-INT if I paid only $8 of interest?

If you withheld any tax, you must report Form 109-INT.For Box 1,3 and 8, the minimum threshold is $10.

      2. Does interest under $10 still go on the recipient’s tax return?

Yes. Recipients need to report all the interests in W-9 form even if it is less than $10. While payers only file Form 1099-INT for $10 or more, the IRS still requires recipients to report every amount.

      3. Where do I report U.S. Treasury interest?

You must use Box 3 to report U.S. Treasury interest paid to the recipients. However, this interest is exempted from state income tax. Make sure to leave a note for the recipients so they can exclude it while filing return.

      4. Can I net early-withdrawal penalties against interest?

No, you cannot net early-withdrawal penalties against interest earned on CD. The penalty is reduced from the interest earned rather than reducing from the principal. Hence, you must report the gross interest in Box 1 and early-withdrawal penalty in Box 2.

      5. What if I discover a TIN mismatch after filing?

If you discover a TIN mismatch after filing, send a CORRECTED 1099-INT form and submit a B-notice request for a new W-9 form within the 15 business days of filing.

      6. Do foreign banks with U.S. branches file 1099-INT?

Yes. Foreign banks with U.S. branches must also file 1099-INT if the interest is paid to US recipients. In such case, banks must tick the FATCA filing requirement checkbox in the Form 1099-INT.

Why Risk Penalties?

Incorrect or missed 1099-INT reporting can have adverse outcomes. So, why wait for the wrong to happen? That’s why, we would suggest you carefully consider the Form 1099-INT filing and read through boxes.

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