What is Form 1099-OID?
Form 1099-OID, if the user’s bond or Certificate of Deposit (CDs) have reached maturity, the user may need to file tax Form 1099-OID. The user must prepare a Form 1099-OID for each person who is a holder of the records of the obligation if the total daily portions of OID for that person is at least $10. Ordinarily, the user will file only one Form 1099-OID for the depositor or holder of a particular obligation for the calendar year. The taxpayer captures the discount as income over the life of the instrument rather than waiting until it is sold.
Original Issue Discount (OID), refers to the excess of the declared purchase price of a bond at maturity over its issue price, and Its taxable interest over the term of the bond. The OID is the difference between the stated redemption price at maturity and the issue price. Obligations generally exist for holdings issued after 1984. Those may have OID that include a bond, debenture, note, certificate, or other proof of indebtedness having a term of more than one year.
How to File IRS Form 1099-OID?
The Form 1099-OID will include the user’s account number as well as all or part of your taxpayer identification number (TIN), social security number (SSN), individual taxpayer identification number (ITIN), adoption taxpayer identification number, or employer identification number (EIN). Additional information on the form includes the OID on a taxable obligation for the part of the year owned by the taxpayer. It also has 14 numbered boxes that contain essential information the taxpayer may need. If you haven’t received a 1099-OID and believe you should have, contact your holder.
1099 OID fraud is a common scam used to obtain money from the U.S. Internal Revenue Service (IRS) by filing false tax refund claims. The IRS initially overlooked the fraud because it lacked time to verify withholding data; however, it has taken notice and has been responded with both criminal prosecutions and public awareness campaigns.
Who Uses Form 1099-OID?
Based on the cases below, A 1099-OID Form has been issued
- When users pay at least $10 of reportable OID to an individual
- When the user has withheld and paid any foreign tax on OID for someone
- When the user withheld and didn’t refund federal income tax from someone under the backup withholding rules.
- Form 1099-OID is sent by a brokerage holding the debt instruments for investors with OID.
- As an investor, the user does not want to issue a tax return form unless the user pays the OID to someone else.
- If the user has an investment with an OID, they should receive their form in the mail at the beginning of each year in order to complete the information asked on the tax return.
When is the Form 1099-OID deadline?
||IRS Paper Filing
||IRS Electronic Filing
Note: If the due date/deadline falls on a Saturday, Sunday, or federal holiday, the filer will need to E-file on the next business day.
Get Started by Registering with Tax2efile Today!