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How to Figure 1099-INT Exceptions

how to figure 1099 taxes

When an individual receives a 1099-INT. it’s likely because a financial institution is reporting income earned from investments. Financial institutions are required to report money that individuals earned from investments held with the firm. The financial institution reports this money to the Internal Revenue Service, and the individual must report this on his tax return. However, not all investment interest is reportable. Some interest is excluded from reporting requirements. The IRS provides some guidance on what interest income is exempt from reporting requirements.

Verify that you are not reporting income to exempt recipients. The IRS outlines what an exempt recipient is on its instructions for the 1099-INT. Exempt recipients include corporations, tax-exempt organizations, individual retirement accounts (IRAs), Archer MSAs, Medicare Advantage MSAs, health savings accounts, U.S. agencies. states, the

District of Columbia, U.S. possessions, registered securities or commodities dealers, brokers and notional principal contract dealers, which are sometimes referred to as “swap dealers.”

Verify you are not reporting exempt interest. The IRS defines exempt interest as an obligation issued by an individual, interest on amounts from sources outside the United States which are also paid outside the United States by a non-U.S. payer, certain portfolio interest, interest on an obligation issued and paid by the same international organization and payments made to a foreign beneficial owner or foreign payee.

Ohio State Tax Refund

Verify that you are not reporting tax-exempt interest. This would include interest earned in an IRA, 401k plan or any other retirement account that is not paid out to the account owner or account holder.

Category: Taxes

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