What Is the IRS 1099-INT?
The Internal Revenue Service expects you to report and pay taxes on all your sources of income. When you receive interest income on your checking and savings accounts, the IRS considers those payments taxable, and you must add that interest to your other sources of income to compute your tax liability. Interest is recorded on IRS Form 1099-INT.
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Interest Income
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If you earn interest on your checking, savings or money-market account, you can expect to receive a 1099-INT form from the financial institution that paid that interest. You should begin receiving 1099-INT forms near the beginning of each year, and you should have all the 1099-INT forms you need by mid to late February. If you are missing any of your 1099-INT forms, contact the bank or credit union to request a replacement copy. If you have online access to your account, you might be able to download your 1099-INT.
Sign-Up Bonus
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Banks sometimes offer cash sign-on bonuses, free gifts and other incentives to entice new customers to open checking and savings accounts. Those incentives can be great perks if you are opening an account, but the Internal Revenue Service considers them to be taxable income. If you receive a cash sign-on bonus, the amount of the bonus is added to the interest reported on the 1099-INT form. If you receive a free gift for opening an account, the value of that gift will be reflected on the 1099-INT form and reported as taxable income to the IRS.
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Copy to IRS
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When your bank or credit union sends you a 1099-INT form, they also send an identical form to the IRS. The IRS then matches the amounts you report to their records. If you do not report all of your interest income to the IRS, you can expect a follow-up letter requesting additional information, and possibly additional taxes.
Schedule B
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When you receive a 1099-INT form, you must report the amount of interest you received when you file your tax return. Use Schedule B to report your interest income, listing each 1099-INT form on a separate line and adding each amount to get the total. If you use tax preparation software, it likely will complete the Schedule B automatically by asking a series of questions about the interest you received.
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