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Taxable InterestCommon sources of taxable interest income are checking and savings accounts, certificates of deposit (CDs), savings certificates, U.S. government bonds, interest on insurance proceeds, and loans that the taxpayer makes to others. 
Some savings and loans, credit unions, and banks call their distributions "dividends." These distributions are really interest and are reported correctly as interest on Form 1099-INT. There are many sources of information about interest income. Ask the taxpayer to supply all Forms 1099-INT from institutions that pay interest. Original Issue Discount (OID) is a form of interest. A debt instrument generally has OID when issued for an amount that is less than its stated redemption price at maturity. The issuer of the debt instrument will report the amount of OID on Form 1099-OID, Original Issue Discount, or a similar statement.
If a taxpayer received less than $10 in interest, the financial institution might not issue Form 1099-INT. 
Some interest is not taxable; examples include state and local bonds, qualified Series EE and Series I savings bonds used to pay higher education expenses, and interest earned on a traditional IRA. |
