Expect an increase in Form 1099-INT this year, is your business ready?
If you're a bank or other financial institution, you're already familiar with Form 1099-INT. This form reports interest income to your customers and the IRS, which banks have been required to file for years. However, with interest rates rising, banks can likely expect a significant increase in the number of Form 1099-INTs they need to file next year.
This blog post will clarify what a 1099-INT is used for and provide helpful tips on streamlining your 1099 reporting.
Form 1099-INT is a tax form that financial institutions use to report interest income to their customers and the IRS. The form must be filed for any customer who earned at least $10 in interest income during the year.
The form includes the following information:
The customer's name and address
The amount of interest earned
The type of account that earned the interest
Any Back-up withholding on the interest payment
Form 1099-INT is essential because it helps the IRS track interest income and ensures taxpayers report their income on their tax returns. If you don't file a Form 1099-INT for a customer, you may be subject to late filing penalties and risk potential customer inquiries about their Form 1099-INT.
With interest rates on the rise, financial institutions, specifically banks, will likely expect an increase in the number of Form 1099-INTs they need to file for tax season 2023. To prepare for this increase in reporting, banks can:
Update their systems to ensure tax season readiness
Utilize software that can assist with automating the Form 1099-INT reporting process.
Ensure they have all of the necessary information on file (i.e., certified TINs) for each customer.
One of the best ways to prepare for the increased reporting requirements is to automate your Form 1099-INT reporting. This can be done using a software solution that automatically generates information returns with customer and payment data within your source system and files at the federal and state levels.
Automating your reporting can save you time and money, and it can also help you avoid errors. Overall, automation is the key to scaling information reporting efficiently and effectively. Simplify your tax compliance with TaxBit. Our modern approach to tax compliance automates information collection and validation from onboarding to form generation, delivery, and filing - enabling you to stay compliant with an ever-changing landscape.