Every year, you can expect to fill out forms to file regarding your income tax returns. Of these forms, a 1099 might be one of them. You may have heard of the 1099-INT Tax Form, but what is it exactly, and how do you file it? This is a very important question if you’re getting started as a freelancer or a small business owner.
A 1099 is an “information filing form”, which is used to report non-salary income to the IRS for federal tax purposes. Furthermore, the 1099-INT form, specifically, is used to report interest income. Keep reading to learn more about the 1099-INT Tax Form and how to file it.
What is a 1099-INT Tax Form?
As mentioned previously the 1099-INT form is used to report interest income. If you receive at least $10 of interest during a calendar year from an individual, bank, or other entity, you are required to complete a 1099-INT. Additionally, the form is issued by all payers of interest income to investors at year end and includes a breakdown of all types of interest income and related expenses.
Instead of receiving miscellaneous or dividend income, you’re receiving periodic interest payments, which is taxable, so you still have to report it to the government. Here is a breakdown of the most important facts about a 1099-INT:
- All payers of interest income must issue a 1099-INT to investors at year end and include a breakdown of all types of interest income and related expenses.
- Brokerage firms, banks, mutual funds, and other financial institutions must file Form 1099-INT on interest over $10 paid during the year.
- Form 1099-INT must be sent to the IRS and to each interest recipient no later than January 31.
How to File a 1099-INT Tax Form?
If you’re curious, check out this example of a filled-out 1099 form below. You must file a 1099-INT Tax Form for each person:
- To whom you paid amounts reportable in Boxes 1, 3, and 8 of at least $10 (or at least $600 of interest paid in the course of your trade or business described in the instructions for Box 1, Interest Income)
- For whom you withheld and paid any foreign tax on interest
- From whom you withheld (and did not refund) any federal income tax under the backup withholding rules regardless of the amount of the payment
What’s Included in a 1099-INT Tax Form?
Although filling out IRS forms may seem complex and stressful, they can be simple when you take it step by step. The form generally includes the following information:
- Your name, address and taxpayer ID number
- The name, address and taxpayer ID number of the company or individual who issued the form
- The amount of income paid to you during the year in the appropriate box, based on the type of income you received
- The amount of federal or state income tax withheld on that income, if any
Additionally, be sure to note that you will have to complete this for every financial institution that you receive interest from.
Conclusion
Now that you know what a 1099-INT Tax Form is and how to file it, you can be prepared and less stressed when tax season rolls around each year! Another tip to be prepared is to keep records of everything you need in a small file box or filing cabinet. Additionally, having a budgeting app can help by keeping track of all your transactions, including tax-related ones.
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