How to File a 1099 OID

Stock certificates issued and sold under par value with a maturity of longer than a year will have to be reported on IRS Form 1099 OID.

The vast majority of taxpayers don't have to worry about filing a 1099 OID. OID stands for "original issue discount bond" but the form encompasses other debt instruments such as debentures, notes, treasury bills, zero coupon bonds and certificates that mature in more than one year. If you have invested in discount bonds or similar instruments, you will receive an annual statement from the issuers, listing the income from interest on the discount issues. You must report the interest income on the 1099 OID.

Step 1

Obtain an IRS original copy of the 1099 OID form. You can obtain one at the offices of most local tax preparers or by contacting the IRS. To order official IRS forms, call 1-800-TAX-FORM (1-800-829-3676). You may also order forms online. It is not acceptable to download the form and file it with your tax returns.

Step 2

Check the form sent by the debt issuer to make certain that the top of the form is marked either "void" or "corrected." Make certain that your name, address, phone number and employee identification are correct and that any other information that is included on the form is valid. If not, contact the issuer, have the information corrected and request that another OID to be issued to you.

Step 3

Complete Form 1096, which requires you to fill in the basics of name, address and other identifying information. Mark box 96, which indicates that you are filing an 1099 OID.

Step 4

Complete box 1, which shows the OID obligation for the part of the year you owned the OID. If it is the full year, the number should be reflected on the statement issued by the OID issuer. However, if there are complicating factors such as payment of a bond premium, consult IRS Publication 212, "Guide to Original Issue Discount (OID) Instruments," for details on how to calculate the correct OID.

Step 5

Complete boxes 2 through 7. Fill in box 2 to show other interest separate from the OID and Box 3 to show interest or principal that you forfeited by withdrawing the money before the OID has reached maturity. Complete sections 4 through 7 if any apply, but they are generally applicable to unusual circumstances. File the form with your 1099 and form 1096.

Tip

According to the IRS, it is not necessary to file a 1099 OID for U.S. savings bonds; certificates of deposit and other face-amount certificates issued at a discount; obligations issued by tax-exempt organizations; mortgage-backed securities and mortgage participation certificates; long-term OID debt instruments issued before May 28, 1969; short-term obligations of a year or less; debt instruments such as tax-free bonds issued at a discount by states or their political subdivisions; obligations issued at a discount by individuals and foreign obligations.

Things You'll Need

  • Original issue discount instruments of debt

  • IRS Form 1099 OID

  • IRS Form 1096

  • IRS Publication 212 (optional)

  • 1099 OID from the issuing debt entity

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