Form 1099-INT: How to Read the Boxes and Report Interest

Form 1099-INT is the tax document a bank, credit union, brokerage, or other payer sends you when it has paid you at least $10 in interest during the year.¹ A duplicate goes to the IRS, so the agency already knows what you earned before your return is filed. You use the numbers on the form to report interest income on Form 1040, and if the amount you report is lower than what the payer reported, expect to hear about it.

When You Should Expect the Form

Payers have to send the form by January 31 of the year after the interest was paid.² The $10 floor is the common trigger. A second one applies at $600 or more when the interest is paid as part of a trade or business, such as certain private loans.³

An important boundary: not receiving a form does not mean the income is untaxed. Interest below $10 is still taxable and still yours to report. The same is true for mortgage interest a buyer pays you on a property you financed; the buyer is not a financial institution and may never issue a 1099-INT, but the income belongs on Schedule B all the same.⁴

Interest becomes taxable the moment it is credited to an account you control, even if you never withdraw it. This is called constructive receipt, and it is why leaving interest to compound in a savings account does not delay the tax.⁵ Common sources include savings accounts, CDs, money market accounts, Treasury securities, corporate bonds, private loans, and interest that accumulates on life insurance dividends once it is available to you.¹

Reading the Boxes That Matter

The form has more than a dozen boxes. Most filers only touch a few.

Box 1 is the total taxable interest from bank deposits, CDs, and similar accounts. For most people this is the number that ends up on the return.⁶
Box 2 shows any early withdrawal penalty a bank charged for cashing out a CD before maturity. That amount is deductible as an adjustment to income.⁷
Box 3 reports interest from U.S. Treasury bills, notes, bonds, and savings bonds. It is separated from Box 1 because Treasury interest is taxable federally but exempt from state and local income tax.⁶
Box 4 shows federal income tax already withheld from your interest. This is backup withholding, addressed below.⁶
Box 6 reports foreign tax paid on international interest, converted to U.S. dollars. You can use it to claim the foreign tax credit or a deduction.⁶
Box 8 shows tax-exempt interest, typically from municipal bonds. You report it but it usually does not increase your federal tax.
Box 9 flags the slice of Box 8 that comes from specified private activity bonds. That amount may still be picked up by the Alternative Minimum Tax.⁶

Boxes 10 through 13 cover bond premium and market discount, which come into play when you buy a bond above or below its face value. Some payers handle bond premium by simply reporting a lower net figure in Box 1 and leaving Box 11 blank.⁶ If you own individual bonds, these boxes are worth reviewing with the payer’s supplemental statements.

Putting the Numbers on Your Return

Add up the taxable interest from every 1099-INT you received. That means Box 1 plus Box 3 across all forms. The total goes on Line 2b of Form 1040. Tax-exempt interest from Box 8 goes on Line 2a. The IRS wants to see the exempt figure even though it does not raise your tax, because it feeds into calculations like the taxability of Social Security benefits.

If your total taxable interest from all sources is more than $1,500, you also have to complete Schedule B, listing each payer and the amount paid.⁴ Schedule B is also required in a few other situations, including nominee interest and the savings bond education exclusion.

Interest is taxed at your ordinary income rate, not the lower capital gains rate. In the 24% bracket, every $1,000 of interest costs $240 in federal tax. If Box 2 shows an early withdrawal penalty, deduct that amount on Schedule 1 as an adjustment to income; it reduces your adjusted gross income directly.⁷

Tax-Exempt and Private Activity Bond Interest

Municipal bond interest is generally free of federal income tax and shows up in Box 8. You still list it. It can affect other parts of the return even though it is not taxed on its own.

Box 9 is the exception worth watching. Interest on specified private activity bonds is a preference item for the Alternative Minimum Tax.⁶ If your income is high enough for the AMT to bite, that “tax-exempt” interest can become taxable through the back door.

What Backup Withholding in Box 4 Means

An amount in Box 4 means the payer already sent part of your interest to the IRS. The backup withholding rate is 24%.⁸ It kicks in for one of a few reasons:

You did not give the payer a valid Social Security number or taxpayer identification number.
The IRS told the payer the number you provided was wrong.
The IRS flagged your account after prior underreporting of interest or dividends.

The fix is to give the payer a correct Form W-9. Withholding stops going forward, and the amount already taken counts as a credit on your return, the same way paycheck withholding does.⁸

If the Form Is Wrong, Missing, or Not Fully Yours

Compare each 1099-INT against your own records. If the interest amount, your name, or your Social Security number is off, ask the payer for a corrected form. If you have not received a correction by the end of February, the IRS can help at 800-829-1040.⁹ File on time using your best information rather than waiting; if a corrected form arrives later, amend the return on Form 1040-X.

Sometimes a 1099-INT lists interest that partly belongs to someone else. A joint account reported under only your SSN is the classic example. Report the full amount on Schedule B, then subtract the portion that belongs to the other person as a nominee distribution.¹⁰ You also have to issue a 1099-INT to the actual owner, unless that person is your spouse, and file a copy with the IRS using Form 1096.

What Happens If You Leave It Off

Because the IRS gets a copy of every 1099-INT, missing interest is one of the easiest errors for the agency’s matching system to spot. A mismatch usually produces a CP2000 notice proposing additional tax plus interest on the shortfall.

On top of the tax itself, the IRS can add an accuracy-related penalty of 20% of the underpayment for negligence or a substantial understatement.¹¹ For deliberate fraud, the penalty rises to 75% of the underpayment. Forgetting a small interest payment is negligence; hiding large amounts is something else. Reporting every form the first time is the simplest way to keep the notices from arriving.

1
Internal Revenue Service. About Form 1099-INT, Interest Income
2
Internal Revenue Service. General Instructions for Certain Information Returns (2025)
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Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID (01/2024)
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Internal Revenue Service. About Schedule B (Form 1040), Interest and Ordinary Dividends
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eCFR. 26 CFR 1.451-2 – Constructive Receipt of Income
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Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID (01/2024) – Section: Specific Instructions for Form 1099-INT
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Internal Revenue Service. Form 1099-INT (Rev. January 2024) Interest Income
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Internal Revenue Service. Instructions for the Requester of Form W-9
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Internal Revenue Service. What to Do When a W-2 or Form 1099 Is Missing or Incorrect
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Internal Revenue Service. Instructions for Schedule B (Form 1040)
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Internal Revenue Service. Accuracy-Related Penalty