Is municipal bond interest taxable?

Municipal bond interest is generally exempt from federal income tax and may also be exempt from state tax if the bond was issued in your state. However, it must still be reported on Form 1040, Line 2a.

What is backup withholding on a 1099-INT?

If you failed to provide your correct taxpayer ID to the payer, they may be required to withhold 24% of your interest income as backup withholding. This is shown in Box 4 and credited on your tax return.

When should I receive my 1099-INT?

Payers must send 1099-INT forms by January 31. Most arrive by mid-February. If you haven't received one, contact your financial institution.

Do I need Schedule B for interest income?

You must file Schedule B if your total interest income from all sources exceeds $1,500 for the tax year.

Income

1099-INT: Interest Income

Reports interest income of $10 or more from banks, savings institutions, and other payers.

Download 1099-INT PDF About on IRS.gov Instructions PDF

Overview

Form 1099-INT, Interest Income, is used to report interest income earned from banks, credit unions, brokerage accounts, and other financial institutions. If you earned $10 or more in interest during the tax year, the payer is required to send you this form.

Interest income includes earnings from savings accounts, certificates of deposit (CDs), money market accounts, U.S. savings bonds, and Treasury notes. Even interest from tax-exempt bonds may be reported on this form, though it may not be taxable at the federal level.

You must report all interest income on your tax return, even if you did not receive a 1099-INT. If your total interest income was less than $10 from a particular institution, you may not receive a form, but you are still required to report the income.

Who Files This Form?

Financial institutions, banks, brokerage firms, and any entity that pays $10 or more in interest during the tax year must file Form 1099-INT with the IRS and provide a copy to the recipient. This includes interest on savings accounts, CDs, money market accounts, and U.S. government obligations.

As a taxpayer, you do not file the 1099-INT itself — you use the information on it to report your interest income on your Form 1040. You must report all interest income, even amounts under $10 that may not trigger a 1099-INT from the payer.

Key Fields

Box 1: Interest income

The total taxable interest income paid to you during the year. This is the amount you report on your tax return.

Box 2: Early withdrawal penalty

Any penalty charged for early withdrawal of a CD or time deposit. This amount is deductible on Schedule 1, Line 18 of Form 1040.

Box 3: Interest on U.S. Savings Bonds and Treasury obligations

Interest from U.S. government bonds. This income is taxable at the federal level but generally exempt from state and local taxes.

Box 4: Federal income tax withheld

Any federal tax withheld due to backup withholding. This is credited toward your tax liability when you file.

Box 8: Tax-exempt interest

Interest from municipal bonds and other tax-exempt securities. This is not taxable at the federal level but must still be reported on your return.

Box 9: Specified private activity bond interest

Tax-exempt interest from private activity bonds that may be subject to the Alternative Minimum Tax (AMT).

Filing Deadlines

Due Date

January 31

Late Filing Penalty

Penalties range from $60 to $310 per form for late filing.

Step-by-Step Instructions

1
Gather all 1099-INT forms received from banks, brokerages, and other financial institutions.
2
Add up all amounts from Box 1 across all your 1099-INT forms.
3
If your total taxable interest exceeds $1,500, you must complete Schedule B, Part I of Form 1040.
4
Report your total interest income on Form 1040, Line 2b.
5
If Box 2 shows an early withdrawal penalty, deduct it on Schedule 1, Line 18.
6
Report any tax-exempt interest from Box 8 on Form 1040, Line 2a (this is informational and not taxed federally).
7
If Box 4 shows federal tax withheld, include this amount on Form 1040, Line 25b.

Common Mistakes to Avoid

Forgetting to report interest under $10

Even if you don't receive a 1099-INT, you must report all interest income. Check your bank statements for small amounts.

Not deducting early withdrawal penalties

The penalty in Box 2 is an above-the-line deduction. Don't miss this — it directly reduces your adjusted gross income.

Double-counting tax-exempt interest

Box 8 (tax-exempt interest) is reported on Line 2a of Form 1040 for informational purposes. Do not include it in your taxable income on Line 2b.

Ignoring state tax implications of Treasury interest

Interest from U.S. Treasury obligations (Box 3) is exempt from state tax in most states. Make sure to exclude it on your state return.

Frequently Asked Questions

Yes. Even though financial institutions only issue 1099-INT for $10 or more, you are legally required to report all interest income on your tax return.

Related Forms

1099-DIV

Dividends and Distributions

1099-OID

Original Issue Discount

Form 1040

U.S. Individual Income Tax Return

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