You need to file Form 1099-INT if you paid at least $10 in interest to a non-exempt recipient during the calendar year, or if you withheld any federal income tax from an interest payment regardless of the amount. A separate $600 threshold applies to certain interest paid in the course of a trade or business. The obligation sits with the payer, not the person who earned the interest, and it reaches banks, credit unions, brokerages, businesses, and even private individuals who pay interest.
The $10 Threshold and What It Covers
Federal law requires any person who pays $10 or more in interest to another person during a calendar year to file an information return reporting the payment.1Office of the Law Revision Counsel. 26 U.S. Code 6049 – Returns Regarding Payments of Interest The $10 is measured across the full calendar year’s payments to a single recipient, not per transaction. Hit $10 for the year with one person, and you file one 1099-INT for that person.
The threshold covers the interest most payers actually distribute: savings account interest, certificates of deposit, corporate bond and debenture interest, and interest on U.S. Treasury obligations. If you run a small business that pays interest on customer deposits, or you lend money privately and collect interest, the same $10 rule reaches you.
Tax-exempt interest from state and local bonds is reported on the 1099-INT for informational purposes, but it does not count toward the $10 filing threshold.2Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID So a payment of only tax-exempt interest below $10 in taxable interest does not by itself trigger a filing.
The $600 Business-Interest Threshold
A separate $600 threshold applies to interest paid in the course of a trade or business that falls outside the standard categories. The IRS instructions give examples: interest on delayed death benefits paid by a life insurance company, interest received with damages, and interest on state or federal tax refunds.3Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID If your business pays this kind of interest and it totals $600 or more to one recipient for the year, you file a 1099-INT even though it doesn’t look like standard bank interest.
When Any Withholding Forces a Filing
A 1099-INT is required whenever you withhold federal income tax from an interest payment, no matter how small the payment.4Internal Revenue Service. About Form 1099-INT Even a few dollars of interest triggers the filing if tax was withheld from it. The withheld amount goes in Box 4 so the recipient gets credit for taxes already paid.
The most common route to withholding on interest is backup withholding, currently 24% of the payment.5Internal Revenue Service. Fast Facts to Help Taxpayers Understand Backup Withholding Backup withholding kicks in when a recipient fails to provide a correct Taxpayer Identification Number, when the IRS notifies you that a recipient’s TIN doesn’t match its records, or when the IRS notifies you that a recipient underreported interest or dividend income.6Internal Revenue Service. Backup Withholding
If you receive a CP2100 or CP2100A notice (a “B-Notice”) telling you a recipient’s TIN doesn’t match, act on it. Begin backup withholding on future payments to that person as directed.7Internal Revenue Service. Backup Withholding B Program Ignoring the notice can expose you to penalties, and every withholding event you should have made is another 1099-INT you should have filed.
Recipients You Don’t File For
Some recipients are exempt from 1099-INT reporting regardless of how much interest you pay them. The IRS instructions list these exempt payees: corporations, tax-exempt organizations, individual retirement arrangements, health savings accounts, government agencies, registered securities dealers, and brokers.2Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID Pay $500 in interest to a 501(c)(3), or $10,000 to a corporation, and no 1099-INT is needed.
The corporate exemption is the one most payers rely on. If the recipient certifies on a Form W-9 that it is a corporation (including an S corporation for most payment types), you skip the 1099-INT. Two exceptions bring you back into filing: interest on a tax-exempt obligation, and any payment subject to backup withholding.
You get this determination right by collecting a Form W-9 from every recipient before you pay them.8Internal Revenue Service. About Form W-9, Request for Taxpayer Identification Number and Certification The W-9 gives you the recipient’s name, address, TIN, and entity type. Without a W-9, you don’t know whether the recipient is exempt, and you don’t have the TIN you need if they aren’t. If a recipient refuses to provide a W-9 or gives you one you suspect is inaccurate, begin backup withholding.
Interest That Belongs on a Different Form
Not every interest-flavored payment goes on a 1099-INT. Original Issue Discount is reported on Form 1099-OID. Dividends paid by a corporation out of earnings and profits belong on Form 1099-DIV, even when the recipient calls them “interest.” Mortgage interest received in the course of a trade or business is reported on Form 1098, not 1099-INT; a private individual who seller-finances a property sale and isn’t in the lending business is not required to file Form 1098.9Internal Revenue Service. Instructions for Form 1098 Filing the wrong form is a common error and can generate correction notices from the IRS.
Nominee Situations
Sometimes interest arrives in your name that actually belongs to someone else, as with joint accounts or trust arrangements. If you receive interest as a nominee for another person, you have your own filing obligation. You report the full interest on your own return, subtract the portion belonging to the other owner, and file a 1099-INT with the IRS showing yourself as the payer and the actual owner as the recipient, along with a Form 1096 transmittal. The actual owner gets a copy by the same January 31 recipient deadline. Spouses don’t need to file nominee returns for interest belonging to each other.10Internal Revenue Service. General Instructions for Certain Information Returns
Deadlines Once You Determine You Must File
Two deadlines apply. Copy B goes to the recipient by January 31 of the year following the payment year, so the recipient has it in time to prepare their own return.11Internal Revenue Service. 2026 Publication 1099 Copy A goes to the IRS on a later schedule: February 28 if you file on paper, March 31 if you file electronically. When any of these dates falls on a weekend or legal holiday, the deadline shifts to the next business day.
Electronic delivery of the recipient copy is allowed, but only with the recipient’s affirmative consent in advance. The consent process has to tell the recipient how to get a paper copy, how to withdraw consent, and what hardware or software they need.12Internal Revenue Service. General Instructions for Certain Information Returns Emailing a PDF without going through that consent process doesn’t satisfy the requirement.
If you can’t meet the IRS deadline, Form 8809 gives you an automatic 30-day extension, but you have to submit it by the original due date, and the extension applies only to the IRS filing, not the January 31 recipient deadline.13Internal Revenue Service. About Form 8809, Application for Extension of Time to File Information Returns
What It Costs to Skip or File Late
The IRS charges a per-return penalty for both late filing with the agency and late delivery to recipients. For returns due in 2026, the tiers are:14Internal Revenue Service. Information Return Penalties
- Filed within 30 days of the deadline: $60 per return
- Filed after 30 days but by August 1: $130 per return
- Filed after August 1 or not filed at all: $340 per return
- Intentional disregard: $680 per return
The amounts are adjusted for inflation each year from the base statutory figures in 26 U.S.C. ยง 6721.15Office of the Law Revision Counsel. 26 U.S. Code 6721 – Failure to File Correct Information Returns Annual caps limit total penalties per payer, and businesses with average annual gross receipts of $5 million or less over the preceding three years get reduced caps. The intentional disregard penalty has no cap.
Speed cuts the cost. Correcting a missed filing within 30 days reduces the per-return penalty by more than 80% compared to letting it run past August 1. If you realize mid-year that you should have collected a W-9 or that a payment slipped past the $10 line, the cheapest response is to file now rather than wait for the IRS to notice.