Form 1099-INT — Interest Income
Form 1099-INT is issued by banks, brokers, and other payers to report interest income of $10 or more. Box 1 reports taxable interest; Box 8 reports tax-exempt interest (from municipal bonds). For tax professionals, Form 1099-INT is a routine document — but Box 8 tax-exempt interest is important for AMT calculations and for determining whether Social Security benefits are taxable.
Key Rules and Authority
| Rule | Detail |
|---|---|
| 1099-INT Threshold | $10 of interest |
| Tax-Exempt Interest | Box 8 — not taxable but affects MAGI |
| AMT Preference | Private activity bond interest — Box 9 |
| Bond Premium | Box 11 — reduces taxable interest |
| OID | Reported on Form 1099-OID |
| Backup Withholding | Box 4 — 24% |
Tax-Exempt Interest — When It Still Matters
Municipal bond interest reported in Box 8 of Form 1099-INT is exempt from federal income tax — but it is not invisible for tax purposes. Tax-exempt interest: (1) is included in the calculation of provisional income for determining the taxability of Social Security benefits; (2) is included in MAGI for purposes of the Net Investment Income Tax; (3) may be a preference item for AMT if it is from private activity bonds (Box 9); and (4) is included in MAGI for purposes of the Medicare premium surcharge (IRMAA). Clients who hold municipal bonds should be aware that the "tax-free" interest can have indirect tax consequences.
Frequently Asked Questions
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