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Rev. date: 3/7/2018

Interest Received

Tax Topic 403
Most interest that you receive or that 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, reporting payments of interest of $10 or more. You should receive Copy B of Form 1099-INT or Form 1099-OID reporting payments of tax-exempt interest of $10 or more. You may receive these forms as part of a composite statement from a broker. You must report all taxable and tax-exempt interest on your federal income tax return, even if you don't receive a Form 1099-INT or Form 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. See the paragraph below with respect to original issue discount (OID), which is treated as interest for federal tax purposes.

Examples of Taxable Interest


Examples of Nontaxable or Excludable Interest


Original Issue Discount Instruments

If a taxable 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, even if no payment is received during the year. 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 in income. For a tax-exempt bond acquired on or after January 1, 2017, you should receive a Form 1099-OID, or a similar statement, of tax-exempt OID that is reportable as tax-exempt interest.

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 or Form 1099-OID 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 Am I Required to Make Estimated Tax Payments for 2018? For more information on interest income, refer to Publication 550.