Do all the different people who receive 1099 form get the same form from the person, the government unit or the company who made them their payments? No, this is not the case. Each varied type of income mentioned has a completely different form 1099 associated with it. Independent contract workers generally receive form 1099-Misc standing for miscellaneous income. In opposition to various other forms which are more particular for specific income types. The businesses or the individuals receiving interest income from a bank generally get 1099 INT forms from their respective banks. Form 1099 interest can also be filed by individuals paying another interest.
A Clear Definition of Form 1099 Interest
Form 1099 INT is a form which is basically used for reporting interest income from brokerages, banks and other different financial institutions. Such earnings always tend to be reportable and they are usually but not always taxable. Although 1099 INT forms are in no ways needed to be issued for amounts which are less than $10, individuals are still supposed to report interest on their returns. The form breaks down major varieties of related expenses and interest income.
Breaking Down 1099 Form INT
Taxpayers receiving more than $15, 00 of taxable interest are required to list all the payers of part 1 of Schedule B on form 1040 or Part 1 of Schedule 1 on 1040A. The interest paid in the form of cash-basis income is reported on form 1099 interest. However, it is to be noted that the income which is owed but not paid is not reported on form 1099 INT.
Filing Requirements for Form 1099 INT
When an individual files his or her taxes, he or she needs to attach the copies of form 1099 INT received but they are not required to report this information on the form on their tax returns. This is because each and every financial institution, bank or any other entity which pays minimum $10 of total interest in a year should prepare 1099-INT, send the individual a copy of the form within 31st January and then file the form with the IRS. The information provided on the form is used by the IRS for making sure that an individual reports the right interest income amount on his or her tax return.
Taxation of Interest
When an individual receives 1099-INT, he or she needs to understand the content reported by each box in the form. This helps the individual in reporting his or her interest on appropriate lines of tax returns. Box 1 reports taxable interest received by an individual while Box 2 reports the interest penalties charged for withdrawing money from a particular amount prior to the date of maturity.