1099-int issued by whom to who?

[equinecpa]

OK I'm feeling slightly confused today. To who should businesses file 1099-int to? I've read the IRS instructions but they just confused me more.

A business pays loan interest to an unincorporated party -is a 1099-int required for the loan int? Does the amount of interest matter (assume it is over $10.00)?

I know businesses don't issue them to banks and lending institutions but are they supposed to issue them to non-lending entities (corporations included?)

Thanks

Carolyn

[taxea]

The party that the interest is paid to provides the 1099 when applicable. The payer does not issue the 1099. taxea

[newbie]

A business pays loan interested to an unincorporated party -is a 1099-int required for the loan int? Does the amount of interest matter (assume it is over $10.00)?


Thanks

Carolyn

No, the payor would not issue a 1099, if the receiver of the monies is required they would issue a 1098 for the interest received.

I know businesses don't issue them to banks and lending institutions but are they supposed to issue them to non-lending entities (corporations included?)

Thanks

Carolyn

No, they would not, financial institutions would issue 1099INT for interest paid to their customers and 1098's for interest received from their customers.

[Jiggers]

Just reversed.

The party that the interest is paid to provides the 1099 when applicable. The payer does not issue the 1099. taxea

The payer issues the 1099, not the recipient.

However, the recipient issues a 1098, when required.

[equinecpa]

The payer issues the 1099, not the recipient.

However, the recipient issues a 1098, when required.

And why was I confused LOL...3 different answers...

I believe you are right jiggers but let's elaborate: Should a business issue a 1099 to everyone (other than banks or inst that are in the bus of lending money ) that they have paid over $10.00 in interest to in a year?

[Jesse]

Carolyn, can you clarify what exactly is transacting?

You asked if a business pays loan interest to an unincorporated party -is a 1099-int required for the loan int?

If it's interest related to a loan, I would think no.

If it is interest related to money that is invested such as a savings account your answer would be maybe depending on whether this was a regular part of the payors ongoing business? Does this business pay interest to more than one payee?

[equinecpa]

Carolyn, can you clarify what exactly is transacting?

You asked if a business pays loan interest to an unincorporated party -is a 1099-int required for the loan int?

If it's interest related to a loan, I would think no.

If it is interest related to money that is invested such as a savings account your answer would be maybe depending on whether this was a regular part of the payors ongoing business? Does this business pay interest to more than one payee?

Interest paid on a loan, not investment interest paid out.

[veritas]

Where in the TaxBook

are the 1099 filing instructions?

I can't seem to find them.

[Jesse]

Interest paid on a loan, not investment interest paid out.

Then I would say the answer to your original question is no, as I cannot think of any circumstance that you would ever issue a 1099-INT for interest paid on a loan.

[veritas]

My understanding is

if a company pays $600 or more of interest to an unincorporated entity for business interest it reports on a 1099-int to the payee.

[Jesse]

if a company pays $10 or more of interest to an unincorporated entity\trust for business interest it reports on a 1099-int to the payee.

Veritas, the 1099-Int would only be issued if you are paying interest on some type of bank deposit, CD's, bonds or something of this nature.

I may be missing something in this thread but I interpret the question to involve a business (A) borrowed money and is now paying it back with interest to another party (P) . If my understanding is correct you would not issue a 1099-INT.

If the loan is secured by real estate and the person receiving the interest (P) is in the trade or business of lending money they would need to issue a 1098-INT to the person who is paying the interest (A).

Correct?

[veritas]

IRS Instructions Interest of $600 or more

File Form 1099-INT, Interest Income, for each person:
1. To whom you paid amounts reportable in boxes 1, 3, and
8 of at least $10 (or at least $600 of interest paid in the course
of your trade or business described in the instructions for Box 1.
Interest Income on page 2),

2. For whom you withheld and paid any foreign tax on
interest, or

3. From whom you withheld (and did not refund) any federal
income tax under the backup withholding rules regardless of the
amount of the payment.

Report only interest payments made in the course of your
trade or business including federal, state, and local government
agencies and activities deemed nonprofit, or for which you were
a nominee/middleman. Report tax-exempt interest, including
exempt-interest dividends from a regulated investment
company (RIC), only on Form 1099-INT. You do not need to
report tax-exempt interest that is original issue discount (OID).
Report interest that is taxable OID in box 1 or 6 of Form
1099-OID, Original Issue Discount, not on Form 1099-INT.
Canadian nonresident aliens. If you pay U.S. bank deposit
interest of at least $10 to a nonresident alien who resides in
Canada, you may have to report the interest on Form 1042-S,
Foreign Person’s U.S. Source Income Subject to Withholding.
This interest is not subject to backup withholding. See the
Instructions for Form 1042-S.

Exceptions to reporting. No Form 1099-INT is required to be
filed for payments made to exempt recipients or for interest
excluded from reporting.

Exempt recipients. You are not required to file Form
1099-INT for payments made to certain payees including but
not limited to a corporation, a tax-exempt organization, any IRA,
Archer MSA, or health savings account (HSA), a U.S. agency, a
state, the District of Columbia, a U.S. possession, a registered
securities or commodities dealer, nominees or custodians,
brokers, or notional principal contract (swap) dealers. For
additional exempt recipients, see Regulations section 1.6049-4


Box 1 page 2 instructions:
Box 1. Interest Income
Enter interest not included in box 3. Include amounts of $10 or more, whether or not designated as interest, that are paid or credited to the person's account by savings and loan associations, mutual savings banks not having capital stock represented by shares, building and loan associations, cooperative banks, homestead associations, credit unions, or similar organizations. Include interest on bank deposits, accumulated dividends paid by a life insurance company, indebtedness (including bonds, debentures, notes, and certificates other than those of the U.S. Treasury) issued in registered form or of a type offered to the public, or amounts from which you withheld federal income tax or foreign tax. In addition, report interest of $10 or more accrued to a trust interest holder (TIH) of a widely held fixed investment trust (WHFIT), a real estate mortgage investment conduit (REMIC), a financial asset securitization investment trust (FASIT) regular interest holder, or paid to a collateralized debt obligation (CDO) holder, as explained below.

Also include interest of $600 or more paid in the course of your trade or business not meeting the above criteria, such as interest on delayed death benefits paid by a life insurance company, interest received with damages, interest on a state or federal income tax refund, or interest attributable to a swap with significant nonperiodic payments.


Don't see where interest paid over $600 on a business loan to an individual is exempt.

[newbie]

No -I don't think you are required to report interest paid on a loan/note payable, but if I'm wrong, and it wouldn't be the first time, then are you also required to get a W-9 from the person you are repaying the loan and remit if they are subject to backup withholding?

Thought I had it figured out but now I'm confused?

[taxea]

"The payer issues the 1099, not the recipient."

That's interesting because...when the bank pays me interest they issue the 1099.
When the IRS pays me interest they issue the 1099.
Guess I was too broad. I am changing my response to: it depends on the circumstances of the interest being paid,sorry to confuse.taxea

[David1980]

Right, the payer is the one who pays the interest (in your examples the bank and the IRS), the recipient is the one who receives the interest (which would be you.)