Form 1099-INT is used to report interest paid in the course of a trade or business. For interest related to securities transactions, the information provided may be different for covered or non-covered transactions:
- For covered securities that were acquired at a discount or premium the payer must (unless certain notices were provided by the investor to the payer) either report the net interest amount or separately report the market discount and premium amortization amounts on the Form 1099-INT.
- For non-covered securities, the payer is not required to provide information to the taxpayer on any discount or premium and it is solely the responsibility of the taxpayer to account for those amounts on their tax return.
Box 1 Interest Income is reported as taxable interest on the tax return.
Box 2 Early Withdrawal Penalty represents any interest or principal forfeited when the investor/taxpayer surrendered the investment (withdrew the money) before the maturity date of the obligation. The investor/taxpayer may deduct this amount from their income as an adjustment to income on Schedule 1 (Form 1040 or 1040-NR).
Box 3 Interest Income on U.S. Savings Bonds and Treasury Obligations is usually reported as taxable interest on the federal tax return but is typically not taxable at the state and local level and may be excluded from income on the state tax return. However, certain Savings Bond interest that is used for educational expenses is excluded from being reported as taxable interest. See Form 8815 and its instructions.
Box 4 Federal Tax Withholdings include backup withholdings withheld from the interest paid.
Box 5 Investment Expenses indicates the taxpayer's share of any investment expenses from a single class REMIC. The amount is included in Box 1 and is for informational purposes only. (Prior to the passage of the Tax Cuts and Jobs Act of 2017, these expenses could be deducted as an itemized deduction on Schedule A (Form 1040) subject to the 2% AGI limitation. Starting in 2018, these expenses are no longer deductible as an itemized deduction.)
Box 6 Foreign Tax Paid out of the interest paid on the investment. The taxpayer may be able to claim this amount as either a foreign tax credit on Form 1116 or an itemized deduction on Schedule A (Form 1040).
Box 7 Foreign Country or U.S. Possession shows the country or U.S. possession to which the foreign tax reported in Box 6 was paid.
Box 8 Tax-Exempt Interest shows the tax-exempt interest paid. This amount is reported on Form 1040 Line 2a. Reduce this amount by the amount in Box 13, but not below zero.
Box 9 Specified Private Activity Bond Interest is included in the Box 8 amount but is subject to the Alternative Minimum Tax and is included on Form 6251. See the Form 6251 instructions for more information.
Box 10 Market Discount shows, for covered securities, the market discount that accrued on the debt instrument during the year. (Market discount generally occurs when a covered security is acquired at less than face value of a bond and the stated redemption price of a bond at maturity is more than the basis in the bond at the time it is acquired.) This amount is added to the Box 1 interest reported on Schedule B (Form 1040). (Note that market discount on a tax-exempt security is included with taxable interest income.)
Box 11 Bond Premium shows, for covered taxable securities, the bond premium amount for the year. (Bond premium generally occurs when a covered security is acquired for an amount greater than the face value of the bond and the stated redemption price of a bond at maturity is less than the basis in the bond at the time it was acquired.) This amount reduces taxable interest and is notated "ABP Adjustment" on Schedule B.
Box 12 Bond Premium on U.S. Treasury Obligations shows the bond premium for the year for covered U.S Treasury securities. This amount reduces taxable interest and is notated "ABP Adjustment" on Schedule B.
Box 13 Bond Premium on Tax-Exempt Bond shows the bond premium for the year for covered non-taxable securities. In TaxSlayer Pro, don't enter this amount here but net it against the amount in Box 8. Any amount in Box 13 that exceeds the amount reported in Box 8 is considered a non-deductible loss.
Box 14 is for informational purposes and isn't entered anywhere in the tax return.
Boxes 15 - 17 show state withholding information related to the income.
Depending on the source and amount of interest income, the interest may or may not need to be reported on Schedule B. See the Schedule B instructions here to determine whether or not Schedule B is required for the tax return you are preparing.
To enter Form 1099-INT on Schedule B in TaxSlayer ProWeb, from the Federal Section of the tax return (Form 1040) select:
- Form 1099-INT, DIV, OID
- Interest or Dividend Income
- Interest Income, Form 1099-INT - Click the button, then Continue.
- Enter the payer's name in the field provided (payer EIN and address are optional).
- For MFJ returns, indicate if the form is for the taxpayer, spouse, or both.
- Enter the amounts on the form in their appropriate field. Note that any federal amount in Box 3 that is tax-exempt for state purposes should be added to the field provided for subtracting it from the resident state tax return.
Note: This is a guide on entering Form 1099-INT into TaxSlayer ProWeb. This is not intended as tax advice.