If you have earned interest during the tax year you are required to report it to the IRS. Even if the interest earned is not taxable you must file a 1099-INT with your taxes. You are not required to send copies of the 1099-INT’s that you receive as long as you report the income.

What Do the Boxes Mean?

So that you can report your interest correctly on your taxes you must understand which each box on a 1099-INT means.

  • Box 1: This box represents the total amount of taxable interest that you have received throughout the year. Examples of this are interest earned on a savings account.
  • Box 2: This box will report any penalties that you were assessed for early withdrawal of money.
  • Box 3: This box will report any interest you have received from items such as Treasury notes, bonds, bills or US savings bonds. Some of the interest gained form these sources may be tax exempt.
  • Box 4: This will report any federal taxes that have already been withheld from interest income.
  • Box 8: This box will show any interest earned through items from a state, such as municipal bonds.

Reporting Interest

You are required to report the total amount that is listed on a 1099-INT in box 1 in the line marked taxable interest on your federal tax return. The amount you report is taxed as other forms of income reported. If you had any penalties assessed to you in Box 2 of your 1099-INT, you may be eligible to claim a deduction in the Adjusted Gross Income section. Amounts in Box 8 are used for reference purposes only as the income reported here is tax exempt, but it is still required to be reported on your federal tax return.

If your taxable interest is greater than $1,500 total you must complete Schedule B of form 1040 and state the amount of interest