What Form 1099-INT Tells You About Interest Income

Form 1099-INT reports interest you earned on bank accounts, savings bonds, and other investments

Form 1099-INT is a document your bank, credit union, brokerage, or other financial institution sends you each January. It lists the interest you earned on money held with them during the previous year. The IRS receives a copy too, so the income on your 1099-INT must match what you report on your tax return.

You receive a separate 1099-INT from each institution that paid you $10 or more in interest during the year. If you earned less than $10 from one source, the institution may not send a form, but you still owe tax on that interest. Interest counts as ordinary income, taxed at your regular income tax rate, not at the lower capital gains rate.

The form itself is straightforward: it shows your name, address, and tax ID number; the institution's name and address; and the dollar amounts in specific boxes. Box 1 contains the total interest paid. Other boxes break down interest by type — for example, Box 3 shows interest from U.S. savings bonds, and Box 8 shows interest on bonds issued by states or cities.

Key Takeaways

• You receive Form 1099-INT from each financial institution that paid you $10 or more in interest during the year.
• Interest income reported on 1099-INT is taxed as ordinary income at your regular tax rate, not as a capital gain.
• The IRS receives a matching copy of your 1099-INT, so the interest you report on your tax return must match the form.
• If you earned less than $10 in interest from one source, you may not receive a 1099-INT but still owe tax on that income.
• Different boxes on the form separate interest by type, such as savings bond interest or tax-exempt municipal bond interest.

Where interest income comes from on a 1099-INT

Interest appears on a 1099-INT when you hold money in accounts or investments that pay you for letting the institution use your funds. A savings account at a bank, a money market account, a certificate of deposit (CD), and a regular brokerage account all generate interest that gets reported on this form.

Bonds also produce interest reported on 1099-INT. If you own U.S. Treasury bonds, corporate bonds, or bond mutual funds, the interest those bonds pay lands on this form. Some bonds — specifically municipal bonds issued by states and cities — produce tax-exempt interest, which appears in a separate box so you know not to count it as taxable income.

Dividends do not appear on 1099-INT. Dividends from stocks and stock mutual funds are reported on a different form called 1099-DIV. Similarly, capital gains (profit from selling an investment for more than you paid) are not interest and do not belong on 1099-INT.

How the boxes on Form 1099-INT are organized

The form uses numbered boxes to separate different types of interest. Box 1 is the main one: it shows your total interest income for the year. This is the number you use most often when reporting on your tax return.

Box 3 shows interest from U.S. savings bonds. Box 4 shows interest from bonds issued by states, cities, or other local governments — this interest is usually exempt from federal tax, so you do not include it in your taxable income. Box 5 shows interest from bonds issued by U.S. possessions and territories. Box 6 shows interest from certain mortgage-backed securities.

Boxes 7 and 8 contain information about early withdrawal penalties. If you withdrew money from a CD or savings account before the maturity date and paid a penalty, that penalty amount appears in Box 2. The form also includes boxes for federal income tax withheld (Box 4) and state tax information (Boxes 11 and 12), though not all institutions use every box.

Why the IRS gets a copy and what that means for your taxes

Financial institutions send 1099-INT forms to both you and the IRS. The IRS uses these forms to check that people are reporting all their income. If you receive a 1099-INT but do not report that interest on your tax return, the IRS will likely notice the mismatch and contact you.

The matching process is automated. The IRS computer system compares the name, tax ID number, and dollar amounts on the 1099-INT it receives from the bank with the income you report on your return. Even small discrepancies can trigger a letter asking you to explain the difference.

This is why accuracy matters: if the form shows $500 in interest but you report $400, you need to be ready to explain why. Sometimes the explanation is straightforward — you may have received the form after filing and filed an amended return, or the institution may have corrected an error. Other times, the IRS will ask you to pay the tax on the unreported amount plus interest and penalties.

Interest under $10 and forms you do not receive

Financial institutions are not required to send you a 1099-INT if you earned less than $10 in interest from them during the year. However, you still owe tax on that interest. If you have multiple accounts earning small amounts of interest, you need to add them all together and report the total on your return.

Keeping your own records is important when you do not receive a form. Write down the interest earned in each account, especially if you move money around during the year or close accounts. Some banks and credit unions provide interest information in your year-end statement or online account summary even if they do not send a separate 1099-INT.

If you earned interest but never received a 1099-INT and cannot find the amount in your account records, contact the institution directly. They can tell you how much interest posted to your account, even if they did not issue a formal form.

Tax-exempt interest and how it appears on the form

Interest from municipal bonds — bonds issued by states, cities, counties, and other local governments — is usually exempt from federal income tax. This interest still appears on your 1099-INT, but in a separate box (usually Box 4) labeled as tax-exempt interest.

Tax-exempt interest does not go on the line of your tax return where you report taxable interest. Instead, it goes on a different line that does not add to your taxable income. However, tax-exempt interest can still affect your taxes indirectly: it counts toward the income threshold that determines whether you have to pay tax on Social Security benefits, and it factors into the calculation for the net investment income tax if your income is very high.

Some municipal bonds are issued by U.S. possessions like Puerto Rico, the U.S. Virgin Islands, or Guam. Interest from these bonds may be exempt from federal, state, and local tax depending on where you live and which possession issued the bond. The 1099-INT will separate this interest so you know its tax status.

What to do when you receive your 1099-INT

When your 1099-INT arrives, check it for accuracy. Verify that your name, address, and tax ID number are correct. Make sure the interest amounts match what you see in your account statements or year-end summaries from the institution.

If you find an error, contact the financial institution right away. They can issue a corrected form (called a corrected 1099-INT) and send it to both you and the IRS. Corrected forms are marked clearly so the IRS knows to disregard the original.

Keep your 1099-INT with your tax records for at least three years. You do not need to attach it to your tax return when you file, but you should have it available if the IRS asks questions about your reported interest income. If you file electronically, your tax software will ask you to enter the information from Box 1, and the software will place it on the correct line of your return.

Frequently Asked Questions

Do I have to report interest if I earned less than $10?

Yes. The $10 threshold only determines whether the institution must send you a 1099-INT form. You still owe tax on all interest you earn, regardless of the amount. Track interest from all your accounts and report the total on your return.

What is the difference between 1099-INT and 1099-DIV?

Form 1099-INT reports interest from savings accounts, bonds, and CDs. Form 1099-DIV reports dividends from stocks and stock mutual funds, plus capital gains distributions. Interest and dividends are taxed the same way (as ordinary income), but they come from different sources and appear on different forms.

If I received a 1099-INT with the wrong amount, what do I do?

Contact the financial institution that issued the form and ask them to send you a corrected 1099-INT. They will also send a corrected copy to the IRS. Once you receive the corrected form, use the new numbers on your tax return and keep both the original and corrected forms with your records.

Is interest from a money market account reported on 1099-INT?

Yes. Money market accounts are savings accounts that pay interest, so any interest you earn is reported on 1099-INT just like interest from a regular savings account or CD.

Can I deduct interest I paid on a loan from my 1099-INT interest income?

No. Interest you earn (reported on 1099-INT) and interest you pay on a loan are separate items. You cannot subtract one from the other. Mortgage interest and student loan interest may be deductible under certain conditions, but that deduction is claimed separately on your tax return, not against your 1099-INT income.