Should I Have a 1099 for Bank Interest?

Significance

You usually receive a 1099-INT if you receive interest from a bank. The bank must remit this form by February of the tax season. Failure of the bank to send you a 1099-INT does not absolve you of the liability to pay taxes on the interest. Thus, if you do not receive a 1099-INT, you must calculate interest paid to you from other sources of information, or at least estimate your interest earnings.

Function

The IRS does not tax all interest paid to U.S. citizens and a bank only needs to a file a 1099-INT with the IRS for interest payments that exceed $10 as of 2011. For example, you do not pay taxes on foreign interest income paid by a non-U.S. entity. You can also defer paying taxes on interest earned on an individual retirement account until you actually withdraw money from the account.

Late 1099-INT

If February passes and you do not have a 1099-INT, call your bank and ask for the information on your 1099-INT. Banks often have information from the 1099-INT readily available to give over the phone. You can also go through previous bank documents for this information. For instance, banks often include the amount of interest paid when they send out monthly account statements.

Considerations

Should you receive a late 1099-INT, compare the total on the form with what you put on your tax return. If you see a discrepancy between the declared interest payments on your 1099-INT and what you reported on your return, file an amended form 1040X. The IRS uses the figures on the 1099-INT to calculate your tax basis. If you don't fix the error, you could owe penalties and fees, and increase the chances of an IRS audit of your return.