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1099-DIV and 1099-INT are two similar yet distinct IRS forms. The main difference between 1099-INT and 1099-DIV lies in their reporting requirements.
1099-DIV reports dividends and other distributions to shareholders, while 1099-INT reports interest income.
Filing the wrong form and reporting dividends or interests on the wrong form can lead to IRS scrutiny. Incorrect reporting also triggers penalties of up to $660 per form.
Understanding 1099-INT vs 1099-DIV, their thresholds, filing rules is important not only for accurate filing but for compliance as well.
Form 1099-INT is used to report interest income of $10 or more paid to individuals, businesses, or trusts. It is filed by banks, credit unions, brokers, and other financial institutions that issue interest payments.
Any individual, business, or trust that earned interest payments meeting the 1099-INT reporting requirements will receive the form when filing their taxes.
1099-INT reporting requirements (Box by box)
For example, if your business paid a vendor $40 in interest, you must issue Form 1099-INT showing $40 in Box 1.
Form 1099-DIV reporting requirement mandates that banks, corporations, mutual funds, REITs, and other financial institutions must report dividends, capital gain distributions, exempt-interest dividends, and other distributions of $10 or more or $600 or more during liquidation during the calendar year. It is also required if any foreign tax or federal income tax is withheld under backup withholding rules, regardless of the amount, and if $600 or more in cash or property is distributed during a liquidation.
1099-DIV reporting requirements (Box by box)
For example, if an investor earned $50 in mutual fund dividends and $20 in capital gain distributions, these amounts would be reported in Box 1a and Box 2a, respectively.
The main difference between 1099-INT and 1099-DIV is that one form reports interest payments (1099-INT) while the other reports dividend payments (1099-DIV).
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Both 1099-INT reporting requirements and 1099-DIV reporting requirements are triggered when businesses or financial institutions issue interest or dividend payments that meet or exceed the reporting thresholds. Thes two forms helps the IRS track taxable income from interest, dividends, capital gains, and other distributions paid to taxpayers.
Forms 1099-INT and 1099-DIV also report backup withholding amounts if TIN was not provided by recipient. Make sure TIN and name match by using Tax1099’s TIN matching service, which verifies recipient data against IRS data. If you fail to validate TINs, it can trigger a 24% backup withholding.
Note: Payments to foreign persons are generally reported on Form 1042-S, not via 1099-INT or 1099-DIV.
Here are a few common mistakes related to when to use 1099-INT and when to use 1099-DIV.
Misreporting interest income on 1099-DIV or dividends on 1099-INT is one of the most common errors. Prevent misreporting by using Tax1099’s automated data validation and form mapping.
The IRS requires you to report interest/dividends that are $10 or more. Neglecting to file for these smaller thresholds can trigger penalties and IRS notices. You can prevent backup withholding and penalties by ensuring all reportable transactions are reported in the correct form.
Capital gains distribution or taxable gains paid to shareholders, must be reported on Box 2a of 1099-DIV. Make sure these gains are accurately captured and reported by doing mandatory field checks before submission.
Trusts and partnerships often receive interest and dividend income and must receive 1099-INT and 1099-DIV. S-corporations are generally exempt from this reporting requirement.
If you’ve made interest or dividend payments from personal accounts for non-business activities, you don’t need to report it on either 1099-DIV or 1099-INT.
Any error on your 1099-DIV or 1099-INT form can lead to audits and penalties. File and submit a ‘CORRECTED’ 1099-DIV or 1099-INT form promptly, and can help prevent further IRS scrutiny.
Collect a completed Form W-9 to verify legal name, address, and TIN.
Verify the TIN and name combination with IRS records using Tax1099’s real-time TIN match.
Identifying payment type ensures compliance with interest vs. dividend income IRS rules.
Check interest payments and dividends to make sure they meet the reporting threshold of $10 or more.
Form 1099-INT should be used to report interest payments, while 1099-DIV should be used only for dividend payments.
You can send copies of the completed 1099-INT or 1099-DIV forms to recipients using Tax1099’s e-Delivery portal or print and mail service.
E-file 1099-INT and 1099-DIV forms and transmit them directly to the IRS with an authorized e-filing platform like Tax1099.
Document and keep copies of the form and receipts of payments for at least four years with our secure data storage feature.
Scenario 1: If a business earns $22.50 in interest from a bank savings account, the bank must issue a 1099-INT with the amount reported in Box 1 since the amount reported is above the threshold.
Scenario 2: An investor receives $100 in dividends from a corporation. Since the dividends are above the $10 reporting threshold, the amount must be reported by the corporate on Box 1a of 1099-DIV.
Scenario 3: If a mutual fund pays $15 of capital gains to an investor, it must be reported on Box 2a of 1099-DIV. Capital gain distributions are reported separately from ordinary dividends.
Scenario 4: If an investor provides an invalid TIN that does not match IRS records, you must implement backup withholding on interest payments and report it on Box 4 of 1099-INT.
Scenario 5: If an account from a U.S. EE Savings Bond earned $55 in interest in a year, the U.S. Treasury will report this on Box 3 of Form 1099-INT. This box is specifically for interest from U.S. savings bonds and Treasury.
Yes, if an individual receives both interest income (for example, from bank savings accounts) and dividends (for example, from stocks or mutual funds), they will receive both Form 1099-INT and Form 1099-DIV
Payments to corporations are not reported on 1099-INT or 1099-DIV unless it’s a reportable interest/dividend payment to certain S-corps, trusts, or LLCs (check IRS rules).
If interest payment was reported on Form 1099-DIV instead of 1099-INT, you need to cancel the incorrect form, issue a new ‘CORRECTED’ 1099-DIV form and report the payments on the 1099-INT.
No, payments to foreign account holders are generally reported on Form 1042-S, not Forms 1099-INT or 1099-DIV.
Qualified dividends are dividends paid during the tax year from domestic corporations and qualified foreign corporations. They are reported on Box 1b of 1099-DIV.
No, the amount does not reach the minimum reporting threshold of $10.However, if TIN was invalid or not provided, backup withholding will be triggered, regardless of the reporting amount.
The deadline for distributing recipient copies of 1099-DIV and 1099-INT is January 31, e-filing deadline is on March 31, and paper filing deadline is on February 28
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