How To Report Interest Income — 2025 Publ 550 (PDF)

Terms you may need to know (see Glossary):

Nominee Original issue discount (OID)

Generally, you report all your taxable interest income on Form 1040 or 1040-SR, line 2b.

Schedule B (Form 1040). You must complete Schedule B (Form 1040), Part I, if any of the following apply.

You had over $1,500 of taxable interest or ordinary dividends.
You are claiming the interest exclusion under the Edu- cation Savings Bond Program (discussed earlier).
You received interest from a seller-financed mortgage and the buyer used the property as a personal residence.
You received a Form 1099-INT for U.S. savings bond interest that includes amounts you reported in a previous tax year.
You received interest or ordinary dividends as a nominee.
You received a Form 1099-INT for interest on frozen deposits.
You received a Form 1099-INT for interest on a bond you bought between interest payment dates.
You are reporting OID in an amount less than the amount shown on Form 1099-OID.
You are reporting interest income of less than the amount shown on a Form 1099 due to amortizable bond premium.

In Part I, line 1, list each payer's name and the amount received from each. If you received a Form 1099-INT or Form 1099-OID from a brokerage firm, list the brokerage firm as the payer.

Reporting tax-exempt interest. Total your tax-exempt interest (such as interest or accrued OID on certain state and municipal bonds, including zero coupon municipal bonds) reported on Form 1099-INT, box 8; Form 1099-OID, box 11; and exempt-interest dividends from a mutual fund or other RIC reported on Form 1099-DIV, box 12. Add these amounts to any other tax-exempt interest you received. Report the total on Form 1040 or 1040-SR, line 2a. Form 1099-INT, box 9, and Form 1099-DIV, box 13, show the tax-exempt interest subject to the AMT on Form 6251. These amounts already are included in the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 12. Do not add the amounts in Form 1099-INT, box 9, and Form 1099-DIV, box 13, to, or subtract them from, the amounts on Form 1099-INT, box 8, and Form 1099-DIV, box 12.

Caution: Do not report interest from an individual retirement arrangement (IRA) as tax-exempt interest.

Form 1099-INT. Your taxable interest income, except for interest from U.S. savings bonds and Treasury obligations, is shown in Form 1099-INT, box 1. Add this amount to any other taxable interest income you received. See the Form 1099-INT Instructions for Recipient if you have interest from a security acquired at a premium. You must report all your taxable interest income even if you do not receive a Form 1099-INT. Contact your financial institution if you do not receive a Form 1099-INT by February 15. Your identifying number may be truncated on any paper Form 1099-INT you receive. If you forfeited interest income because of the early withdrawal of a time deposit, the deductible amount will be

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shown on Form 1099-INT, box 2. See Penalty on early withdrawal of savings, later.

Form 1099-INT, box 3 shows the interest income you received from U.S. savings bonds, Treasury bills, Treasury notes, and Treasury bonds. Generally, add the amount shown in Form 1099-INT, box 3 to any other taxable interest income you received. If part of the amount shown in Form 1099-INT, box 3 was previously included in your interest income, see U.S. savings bond interest previously reported , later. If you redeemed U.S. savings bonds you bought after 1989 and you paid qualified educational ex- penses, see Interest excluded under the Education Sav- ings Bond Program , later.

Form 1099-INT, box 4 will contain an amount if you were subject to backup withholding. Include the amount from box 4 on Form 1040 or 1040-SR, line 25b.

Form 1099-INT, box 5 shows your share of investment expenses of a single-class REMIC. This amount is included in Form 1099-INT, box 1 and is not deductible.

Form 1099-INT, box 6 shows foreign tax paid. You may be able to claim this tax as a deduction or a credit on your Form 1040 or 1040-SR. See your tax return instructions. Form 1099-INT, box 7 shows the country or U.S. territory to which the foreign tax was paid.

For a covered security, if you made an election under section 1278(b) to include market discount in income as it accrues and you notified your payer of the election in writing in accordance with Regulations section 1.6045-1(n) (5), Form 1099-INT, box 10 shows the market discount that accrued on the debt instrument during the year while held by you. Report this amount on your income tax return as directed in the Instructions for Form 1040 or 1040-SR.

For a covered security, Form 1099-INT, box 11 shows the amount of premium amortization for the year, unless you notified the payer in writing in accordance with Regulations section 1.6045-1(n)(5) that you did not want to amortize bond premium under section 171. If an amount is reported in this box, see the Instructions for Schedule B (Form 1040). If an amount is not reported in this box for a covered security acquired at a premium, the payer has reported a net amount of interest in box 1, 3, 8, or 9, whichever is applicable. If the amount in this box is greater than the amount of interest paid on the covered security, see Regulations section 1.171-2(a)(4).

Form 1099-OID. The taxable OID on a discounted obligation for the part of the year you owned it is shown in Form 1099-OID, box 1. Include this amount in your total taxable interest income. But see Refiguring OID shown on Form 1099-OID, earlier. Your identifying number may be truncated on any paper Form 1099-OID you receive.

You must report all taxable OID even if you do not receive a Form 1099-OID.

Form 1099-OID, box 2 shows any taxable interest on the obligation other than OID. Add this amount to the OID shown in Form 1099-OID, box 1 and include the result in your total taxable income.

If you bought and/or sold an obligation during the year, see Bonds Sold Between Interest Dates, earlier, for information about the treatment of periodic interest that may be shown in Form 1099-OID, box 2.

If you forfeited interest or principal on the obligation because of an early withdrawal, the deductible amount will be shown in Form 1099-OID, box 3. See Penalty on early withdrawal of savings, later.

Form 1099-OID, box 4 will contain an amount if you were subject to backup withholding. Report the amount from box 4 on Form 1040 or 1040-SR, line 25b.

Form 1099-OID, box 5 shows the market discount that accrued on the debt instrument during the year while held by you for a covered security acquired with OID, if you made an election under section 1278(b) to include market discount in income as it accrues and you notified your payer of the election in writing in accordance with Regulations section 1.6045-1(n)(5).

For a taxable covered security, Form 1099-OID, box 6 shows the amount of acquisition premium amortization for the year that reduces the amount of OID that is included as interest on your income tax return.

Form 1099-OID, box 9 shows your share of investment expenses of a single-class REMIC. This amount is not deductible.

U.S. savings bond interest previously reported. If you received a Form 1099-INT for U.S. savings bond interest, the form may show interest you do not have to report. See Form 1099-INT for U.S. savings bond interest, earlier.

On Schedule B (Form 1040), Part I, line 1, report all the interest shown on your Form 1099-INT. Then follow these steps.

Several rows above Schedule B (Form 1040), Part I, line 2, enter a subtotal of all interest listed on Schedule B (Form 1040), Part I, line 1.
Below the subtotal, enter “U.S. Savings Bond Interest Previously Reported” and enter amounts previously reported or interest accrued before you received the bond.
Subtract these amounts from the subtotal and enter the result on Schedule B (Form 1040), Part I, line 2.

Example 1. Your parents bought U.S. savings bonds for you when you were a child. The bonds were issued in your name, and the interest on the bonds was reported each year as it accrued. See Choice to report interest each year , earlier.

In March 2025, you redeemed one of the bonds—a $1,000 Series EE bond. The bond was originally issued in March 2006 for $500.00. When you redeemed the bond, you received $913.60 for it.

The Form 1099-INT you received shows interest income of $413.60. However, since the interest on your savings bonds was reported yearly, you need only include the $7.20 interest that accrued from January 2025 to March 2025. On Schedule B (Form 1040), Part I, line 1, enter your interest income as shown on Form 1099-INT—$413.60. If you had other taxable interest income, you would enter it next and then enter a subtotal, as described earlier, before going to the next step. Several rows above Schedule B (Form 1040), Part I, line 2, enter “U.S. Savings Bond Interest Previously Reported” and enter $406.40 ($413.60 −

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$7.20). Subtract $406.40 from $413.60 and include $7.20 on Schedule B (Form 1040), line 2. Add this amount to your subtotal (if any) and in the total on Schedule B (Form 1040), line 4.

Example 2. Your uncle died and left you a $1,000 Series EE bond. You redeem the bond for $1,000.

Your uncle paid $500 for the bond, so $500 of the amount you receive upon redemption is interest income. Your uncle's executor included in your uncle's final return $200 of the interest that had accrued at the time of your uncle's death. You have to include only $300 in your income.

The bank where you redeem the bond gives you a Form 1099-INT showing interest income of $500. You also receive a Form 1099-INT showing taxable interest income of $300 from your savings account.

You file Form 1040 or 1040-SR and complete Schedule B (Form 1040). On Schedule B (Form 1040), line 1, you list the $500 and $300 interest amounts shown on your Forms 1099. Several rows above Schedule B (Form 1040), line 2, you put a subtotal of $800. Below this subtotal, enter “U.S. Savings Bond Interest Previously Reported” and enter the $200 interest included in your uncle's final return. Subtract the $200 from the subtotal and enter $600 on Schedule B (Form 1040), line 2. You then complete the rest of the form.

Worksheet for savings bonds distributed from a retirement or profit-sharing plan. If you cashed a savings bond acquired in a taxable distribution from a retirement or profit-sharing plan (as discussed under U.S. Sav- ings Bonds , earlier), your interest income does not include the interest accrued before the distribution and taxed as a distribution from the plan.

Note: Use the worksheet below to figure the amount you subtract from the interest shown on Form 1099-INT.

A. Enter the amount of cash received upon redemption of the bond . . . . . . . . . . . . . . . . . . . . . . . . . .

B. Enter the value of the bond at the time of distribution by the plan . . . . . . . . . . . . . . . . . . . . . . . . . . .

C. Subtract the amount on line B from the amount on line A. This is the amount of interest accrued on the bond since it was distributed by the plan . . . . . . . .

D. Enter the amount of interest shown on your Form 1099-INT . . . . . . . . . . . . . . . . . . . . . . . . . . . .

E. Subtract the amount on line C from the amount on line D. This is the amount you include in “U.S. Savings Bond Interest Previously Reported” . . . . . . . . . . . .

Your employer should tell you the value of each bond on the date it was distributed.

Example. You received a distribution of Series EE U.S. savings bonds in December 2021 from your company's profit-sharing plan.

In March 2024, you redeemed a $100 Series EE bond that was part of the distribution you received in 2021. You

received $88.16 for the bond the company bought in May 2007. The value of the bond at the time of distribution in 2021 was $81.72. (This is the amount you included on your 2021 return.) The bank gave you a 2024 Form 1099-INT that shows $38.16 interest (the total interest from the date the bond was purchased to the date of redemption). Since a part of the interest was included in your income in 2021, you need to include in your 2024 income only the interest that accrued after the bond was distributed to you.

Tip: To determine the value of your savings bond, go to Savings Bond Calculator .

On your 2024 Schedule B (Form 1040), line 1, include all the interest shown on your Form 1099-INT as well as any other taxable interest income you received. Several rows above Schedule B (Form 1040), line 2, put a subtotal of all interest listed on Schedule B (Form 1040), line 1. Below this subtotal, enter “U.S. Savings Bond Interest Previously Reported” and enter the amount figured on the worksheet below.

A. Enter the amount of cash received upon redemption of the bond . . . . . . . . . . . . . . . . . $88.16 B. Enter the value of the bond at the time of distribution by the plan . . . . . . . . . . . . . . . . . . $81.72 C. Subtract the amount on line B from the amount on line A. This is the amount of interest accrued on the bond since it was distributed by the plan . . . . . . . $6.44 D. Enter the amount of interest shown on your Form 1099-INT . . . . . . . . . . . . . . . . . . . . . . . . . . $38.16 E. Subtract the amount on line C from the amount on line D. This is the amount you include in “U.S. Savings Bond Interest Previously Reported” . . . . . $31.72

Subtract $31.72 from the subtotal and enter the result on Schedule B (Form 1040), line 2.

Interest excluded under the Education Savings Bond Program. Use Form 8815 to figure your interest exclusion when you redeem qualified savings bonds and pay qualified higher education expenses during the same year.

For more information on the exclusion and qualified higher education expenses, see the earlier discussion under Education Savings Bond Program .

Interest on seller-financed mortgage. If an individual buys his or her home from you in a sale that you finance, you must report the amount of interest received on Schedule B (Form 1040), line 1. Include on line 1 the buyer's name, address, and SSN. If you do not, you may have to pay a $50 penalty. The buyer may have to pay a $50 penalty if he or she does not give you this information.

You also must give your name, address, and SSN (or EIN) to the buyer. If you do not, you may have to pay a $50 penalty.

Frozen deposits. If you receive a Form 1099-INT for interest on deposits that you could not withdraw at the end of 2025, you must still exclude these amounts from your gross income. (See Interest income on frozen deposits , earlier.) Do not include as income on your annual income tax return. On Schedule B (Form 1040), Part I, include the full amount of interest shown on your Form 1099-INT,

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line 1. Several rows above Schedule B (Form 1040), Part I, line 2, put a subtotal of all interest income. Below this subtotal, enter “Frozen Deposits” and show the amount of interest that you are excluding. Subtract this amount from the subtotal and enter the result on Schedule B (Form 1040), Part I, line 2.

Accrued interest on bonds. If you received a Form 1099-INT that reflects accrued interest on a bond you bought between interest payment dates, include the full amount shown as interest on the Form 1099-INT on Schedule B (Form 1040), Part I, line 1. Then, below a subtotal of all interest income listed, enter “Accrued Interest” and the amount of accrued interest you paid to the seller. That amount is taxable to the seller, not you. Subtract that amount from the interest income subtotal. See Bonds Sold Between Interest Dates, earlier.

Nominee distributions. If you received a Form 1099-INT that includes an amount you received as a nominee for the actual owner, report the full amount shown as interest on the Form 1099-INT on Schedule B (Form 1040), Part I, line 1. Then, below a subtotal of all interest income listed, enter “Nominee Distribution” and the amount that actually belongs to someone else. Subtract that amount from the interest income subtotal.

File Form 1099-INT with the IRS. If you received interest as a nominee in 2025, you must file a Form 1099-INT for that interest with the IRS. Send Copy A of Form 1099-INT with a Form 1096 to your Internal Revenue Service Center by March 2, 2026 (March 31, 2026, if you file Form 1099-INT electronically). Give the actual owner of the interest Copy B of the Form 1099-INT by February 2, 2026. On Form 1099-INT, you should be listed as the “Payer.” Prepare one Form 1099-INT for each other owner and show that person as the “Recipient.” However, you do not have to file Form 1099-INT to show payments for your spouse. For more information about the reporting requirements and the penalties for failure to file (or furnish) certain information returns, see the General Instructions for Certain Information Returns.

Similar rules apply to OID reported to you as a nominee on Form 1099-OID. You must file a Form 1099-OID with Form 1096 to show the proper distributions of the OID.

Example. You and your sibling have a joint savings account that paid $1,500 interest for 2025. Your sibling deposited 30% of the funds in this account, and you and your sibling have agreed to share the yearly interest income in proportion to the amount each of you has invested. Because your SSN was given to the bank, you received a Form 1099-INT for 2025 that includes the interest income earned belonging to your sibling. This amount is $450, or 30% of the total interest of $1,500.

You must give your sibling a Form 1099-INT by February 2, 2026, showing $450 of interest income your sibling earned for 2025. You also must send a copy of the nominee Form 1099-INT, along with Form 1096, to the Internal Revenue Service Center by March 2, 2026 (March 31, 2026, if you file Form 1099-INT electronically). Show your own name, address, and SSN as that of the “Payer” on the

Form 1099-INT. Show your sibling's name, address, and SSN in the blocks provided for identification of the “Recipient.”

When you prepare your own federal income tax return, report the total amount of interest income, $1,500, on Schedule B (Form 1040), Part I, line 1, and identify the name of the bank that paid this interest. Show the amount belonging to your sibling, $450, as a subtraction from a subtotal of all interest on Schedule B (Form 1040) and identify this subtraction as a “Nominee Distribution.” (Your sibling will report the $450 of interest income on any income tax return your sibling files and identify you as the payer of that amount.)

Original issue discount (OID) adjustment. If you report OID in an amount less than the amount shown on Form 1099-OID or other written statement (such as for a REMIC regular interest), include the full amount of OID shown on your Form 1099-OID or other statement on Schedule B (Form 1040), Part I, line 1. Show OID you do not have to report below a subtotal of the interest and OID listed. Identify the amount as “OID Adjustment” and subtract it from the subtotal.

Penalty on early withdrawal of savings. If you withdraw funds from a certificate of deposit or other deferred interest account before maturity, you may be charged a penalty. The Form 1099-INT or similar statement given to you by the financial institution will show the total amount of interest in box 1 and will show the penalty separately in box 2. You must include in income all interest shown in Form 1099-INT, box 1. You can deduct the penalty on Schedule 1 (Form 1040), line 18.