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Rev. date: 2/13/2017

Interest Received

Tax Topic 403
Most interest that you either receive or is credited to an account that you can withdraw without penalty is taxable income in the year it becomes available to you. However, some interest you receive may be tax-exempt. You should receive Copy B of Form 1099-INT or Form 1099-OID, generally with respect to payments of interest of $10 or more showing the taxable interest (including OID). You should receive Copy B of Form 1099-INT with respect to payments of tax-exempt interest of $10 or more, showing the reportable tax-exempt interest. You must include all taxable interest in your income on your federal income tax return, even if you don't receive a Form 1099-INT or 1099-OID. You must give the payer of interest income your correct taxpayer identification number; otherwise, you may be subject to a penalty and backup withholding. Refer to Tax Topic 307 for information on backup withholding.

Examples of Taxable Interest


Examples of Nontaxable or Excludable Interest


Original Issue Discount Instruments

If a bond, note or other debt instrument was originally issued at a discount, part of the original issue discount may have to be included in income each year as interest. Refer to Publication 550 or Publication 1212, Guide to Original Issue Discount (OID) Instruments for more information on original issue discount. You should receive a Form 1099-OID, Original Issue Discount, or a similar statement from each payer of taxable original issue discount of $10 or more, showing the amount you should report.

Nominee Recipient

There are times when you may receive a Form 1099 for interest in your name that actually belongs to someone else. In this case, the IRS considers you a nominee recipient. If you received a Form 1099-INT, Interest Income, that includes an amount you received as a nominee for the real owner:

Additional Information

If you receive taxable interest, you may have to pay estimated tax. For more information, see Estimated Taxes and Do You Have to Pay Estimated Tax? For more information on interest income, refer to Publication 550.