Common Questions About IRS 1099 OID
Unlike your broker, are your bonds maturing? The IRS 1099 OID Original Issue Discount reports taxable interest income.
What is IRS 1099-OID?
When a bond of price less than face value is purchased, an IRS 1099 OID ‘Original Issue Discount’ will be issued. OID is a kind of interest – specifically, it is the excess of a bond or note’s stated redemption price over its issue price. The profit you make on the purchase is taxable interest income for you over the life of the bond. Form 1099 OID must be prepared for every person who holds a record of the debt if the OID included in the holder’s gross income is $10 minimum.
Who needs an IRS 1099-OID form?
Form IRS 1099-OID must be filed by an issuer with any bond outstanding or an issuer of a certificate of deposit, a broker holding an OID obligation, a trustee of widely held fixed investment trust and a financial institution having deposit arrangements like bonus-saving plans and time deposits. A 1099-OID must be filed for each person whom you have paid any foreign tax on an OID.
Is IRS 1099-OID accompanied by another form?
The 1099 OID form must be filed with along with IRS Form 1096 Annual Summary and Transmittal of U.S. Information Returns.
When is IRS 1099-OID due?
File copies with the IRS by the end of February and a copy to the recipient by the end of January.
How do I fill out IRS 1099-OID?
In Form 1099 OID, you’ll need to provide the payer’s information, business tax identification number, recipient’s identification number and other basic information. Fill the numbered boxes after reading the instruction carefully.
What are the exemptions of reporting OID?
The rules of OID are not applicable for the following debt instruments:
• The US saving bonds
• Tax-exempt obligations
• Obligations issued before March 2, 1984
• Short-term debt instruments with fixed maturity date of less than one year