On Form 1040, the taxable interest from Box 1 and Box 3 of every 1099-INT you receive gets added together and entered on Line 2b. Tax-exempt interest from Box 8 goes on Line 2a. If your total taxable interest exceeds $1,500, you also list each payer in Part I of Schedule B. That covers the main question of where to put 1099-INT amounts on your tax return, but three other boxes on the form feed different lines, and missing them either costs you money or triggers an IRS notice.
Which 1099-INT Box Goes on Which Line
Box 1 reports taxable interest from bank accounts, CDs, and similar deposits. Box 3 reports interest from U.S. savings bonds and Treasury securities. Add Box 1 and Box 3 across all of your 1099-INTs and put the total on Line 2b of Form 1040.1Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID (Rev. January 2024) That amount is taxed at your ordinary income rate.
Box 8 is tax-exempt interest, usually from state and municipal bonds. It goes on Line 2a. You won’t owe federal income tax on it, but the IRS still wants it disclosed because it factors into other calculations, including how much of your Social Security may be taxable.1Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID (Rev. January 2024)
One thing to watch: banks are only required to send a 1099-INT when they paid you $10 or more during the year.2Internal Revenue Service. About Form 1099-INT, Interest Income Smaller amounts are still taxable. If you earned $6 in a savings account and never received a form, that $6 still belongs on Line 2b. The IRS matches bank records against your return, and a mismatch can produce an automated notice or an underpayment penalty.3Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty
Box 2: The Early Withdrawal Penalty Is Deductible
If you cashed a CD before it matured, the bank probably charged an early withdrawal penalty, and it shows up in Box 2. That amount is deductible. Enter it on Schedule 1, Line 18, and the deduction flows to Form 1040, Line 10 as an adjustment to income.4Internal Revenue Service. Instructions 1040 (2025) Because it’s an adjustment rather than an itemized deduction, you still get it if you take the standard deduction. Skipping this line overpays your taxes by exactly the penalty amount.
Box 4: Backup Withholding Goes on Line 25b
Box 4 shows federal income tax already withheld from your interest. This usually happens through backup withholding, which a payer applies when you haven’t furnished a correct taxpayer identification number or when the IRS has told the payer you previously underreported interest or dividends.5Internal Revenue Service. Backup Withholding
Report the withheld amount on Line 25b of Form 1040, in the payments section.6Internal Revenue Service. Form 1099-INT (Rev. January 2024) That’s money you’ve already paid toward your tax bill, and it counts the same as withholding from a paycheck. Leaving it off means you don’t get credit for it until you amend the return.
When You Have to File Schedule B
Schedule B is required if your total taxable interest for the year exceeds $1,500.7Internal Revenue Service. About Schedule B (Form 1040), Interest and Ordinary Dividends It’s also required, regardless of amount, in several specific situations:
- You received interest from a seller-financed mortgage where the buyer used the property as a personal residence.
- You’re reducing your interest income by amortizable bond premium.
- You’re claiming the education savings bond interest exclusion on Form 8815.
- You received nominee interest that belongs to someone else.
- You had a financial interest in or signature authority over a foreign financial account.
In Part I, list each payer’s name and the interest received from that payer. The Part I total has to match Line 2b of your Form 1040.8Internal Revenue Service. 2025 Instructions for Schedule B (Form 1040) A mismatch between those two numbers is one of the fastest ways to delay a refund.
Nominee Interest
Sometimes a 1099-INT reports interest that partly belongs to someone else, such as a joint account holder who isn’t your spouse. List the full amount from the form on Schedule B, Line 1. Below your subtotal, write “Nominee Distribution” and subtract the portion that belongs to the other person.8Internal Revenue Service. 2025 Instructions for Schedule B (Form 1040) You’re also required to issue your own Form 1099-INT to the actual owner and send a copy to the IRS with Form 1096.
Seller-Financed Mortgage Interest
If you sold a home and financed the purchase yourself, any interest the buyer pays you goes on Schedule B, Line 1 before your other interest entries. Include the buyer’s name, address, and Social Security number. Leaving out any of those details can result in a $50 penalty.9Internal Revenue Service. Instructions for Schedule B (Form 1040)
The Foreign Account Question in Part III
Part III of Schedule B asks whether you had a financial interest in or signature authority over any foreign financial account during the year. This catches more people than you’d expect, including anyone with an overseas bank account opened before moving to the U.S. or an inherited account abroad. If the combined value of all your foreign accounts exceeded $10,000 at any point during the year, you must also file FinCEN Form 114 (the FBAR) separately with the Financial Crimes Enforcement Network.10Internal Revenue Service. Report of Foreign Bank and Financial Accounts (FBAR)
The penalties for ignoring this are steep. A non-willful violation can cost up to $10,000 per account per year. If the IRS determines the failure was willful, the penalty jumps to the greater of $100,000 or 50% of the account balance.11Internal Revenue Service. FBAR Penalties Don’t leave Part III blank because you’re unsure. Answer it.
If a 1099-INT Is Missing or Wrong
Payers must mail 1099-INTs by January 31.12Internal Revenue Service. Publication 1099 General Instructions for Certain Information Returns If a form never arrives or the amount looks wrong, contact the bank first and ask for a corrected copy. If you still don’t have a correct form by the end of February, call the IRS at 800-829-1040 and they’ll follow up with the payer.13Internal Revenue Service. What to Do When a W-2 or Form 1099 Is Missing or Incorrect
If the filing deadline comes and the corrected form still isn’t in hand, file on time using your best estimate from your own records. If a corrected 1099-INT later shows a different amount, file Form 1040-X to amend.13Internal Revenue Service. What to Do When a W-2 or Form 1099 Is Missing or Incorrect Filing late to wait for a corrected form is almost always worse than filing on time with an estimate.
Keep every 1099-INT, your Schedule B, and your completed Form 1040 for at least three years after filing. That’s the standard window for most IRS audits.