Form 1099-INT interest income is important to those who earn paid interest on savings accounts and US Savings Bonds. The 1099-INT information is provided to both payee and IRS. Late in January, you may receive a 1099-INT form from your bank or other financial institution reporting how much interest you have earned from your investment, savings account, money market account, or Treasury bond. It is legally required to be given to anyone who receives more than $10 on all accounts over the course of a tax year. Under certain exemptions, this can be stretched to $600. If you are a church or government (small or large) you do not need to worry about this form, as you are exempt from federal taxes.
This 1099 form is intended to ensure that you report the correct amount of taxable interest income. The IRS also retains a copy, so it is in your best interest to include it in your stack of paperwork when visiting your tax preparer. You may receive a 1099-INT form if you have received more than $10 in interest payments from your bank, though under certain exceptions the interest earned can be as high as $600.
The 1099-INT form is to be filed for the IRS can keep track of taxable earned income through interest, and it’s also useful for statistical purposes. Upon receipt of a 1099-INT, retain it for your records, and if you receive one after you file, be sure to file a correction to ensure you are not penalized by the IRS for not reporting the interest income. If it’s a significant amount, the penalties may certainly be more than you bargained for.
There are a few different ways to file Form 1099-INT. If you are an institution, the easiest way is to e-File. It’s the most convenient, as you can do it whenever you have time and wherever you have an internet connection. If you want to efile more than 250 1099-INT forms, it is required to file your 1099 form electronically by January 31st 2017 before 1099 deadline. If you are reporting income from interest on your tax return, it is also easiest to e-File. For ease of filing, you should work with a tax advisor or preparer to help you accurately file or report your earned income from interest.
Any institution that paid out more than $10 worth of interest on any account is required to file. You may wonder if there are any exempted accounts, and there are. Individual Retirement Accounts (IRA), Medical Savings Accounts, and Health Savings Accounts are all exempt from tax. Certain individuals are also exempt, such as churches, state and local governments, and corporations are all exempt, and the latter receive a different form. Churches are not subject to federal taxes. U.S citizens living abroad with money in non-U.S institutions are also not required to receive a 1099-INT.
If you are an institution that is required to file a 1099-INT, it’s worth noting that seeking the help of a tax advisor would be worth your time to make sure that you report everything accurately and that all 1099 forms are filed correctly. Even if you are a small institution, this small step is infinitely worth the time and money as 1099 tax forms and filing can be confusing, especially if you are not used to them.
If you are an individual receiving your 1099-INT, make sure you file the amounts accurately. It is possible that you may not even need to be taxed on it depending on the amount owed. When you are asked about any income received from interest when you e-File, this is the form you will need to provide. You should receive one from every institution that paid you more than $10 on all accounts through the year. The taxes on paid interest will be calculated rather than per interest bearing account.
Now that you know about the 1099-INT form, you can work with a great tax advisor or preparer to get the most accurate tax reporting and get the most out of your return.
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