For payers, accurate reporting starts with picking the right form. The difference between 1099-INT and 1099-DIV is what you paid out interest vs. shareholder distributions. This guide covers when each form applies, key thresholds, and the common mix-ups (cash-sweep interest vs. money-market dividends, tax-exempt items) that lead to avoidable corrections.
Why It’s Important to Understand 1099-INT vs 1099-DIV Clearly
For payers, getting the difference between interest and dividend reporting right prevents misclassification, correction cycles, and penalty exposure. The IRS’s Automated Underreporter (AUR) program matches 1099 data to recipient returns, and misclassifying interest as dividends (or vice versa) can trigger CP2000 underreporter notices to recipients and expose payers to IRC §§ 6721 and 6722 penalties for filing/furnishing incorrect information returns.
Beyond the IRS, misfiled forms weaken your audit trail and can surface in SOC 2/ISO control evidence, eroding client trust.
That’s why many banks, brokers, funds, and REITs use e-file platforms like 1099Online to automate form selection, validate TIN/name data, and run pre-submission checks—streamlining 1099 filing for investment income.
When to Use Form 1099-INT
You need to use it when you pay interest, and any of these apply:
- $10 or more total for bank/Treasury/tax-exempt interest
- $600 or more of business interest (e.g., late-payment or installment interest)
- Any amount if you withheld federal backup or foreign tax.
Example:
A software company adds $25 in late-payment interest to a vendor’s invoice. Because trade-or-business interest reporting applies at $600 or more (and $25 is below $600 with no withholding), the company doesn’t need to issue Form 1099-INT.
Additional Notes for Payers
- Total interest under $10 (Boxes 1, 3, or 8): No 1099-INT required for a U.S. recipient.
- Trade-or-business $600 rule: File 1099-INT if you pay $600+ of interest, such as late-payment or installment interest, during the year.
- Any backup or foreign tax withheld: File 1099-INT regardless of amount; report in Box 4 (federal withholding) or Box 6 (foreign tax).
- Exempt accounts: Don’t file for interest paid within IRAs, HSAs, and similar tax-advantaged accounts.
- Corporations: Corporations are generally exempt recipients for Form 1099-INT. Do not file for corporate recipients unless an exception applies (for example, credits/interest to holders of certain tax credit bonds).
In short, Form 1099-INT covers interest you pay as a borrower from bank/debt instruments to business late-payment charges subject to the rules above.
When to Use Form 1099-DIV
Form 1099-DIV covers dividends and distributions you pay from stocks, mutual funds, or REITs. File it when any of the following apply:
- You paid $10 or more in total dividends or other reportable distributions (e.g., ordinary/qualified dividends, capital-gain distributions, nondividend/return-of-capital, exempt-interest, 199A dividends).
- You paid $600 or more in liquidation distributions (cash or property).
- Any amount was paid with backup withholding
- You paid foreign tax with respect to the distribution.
Example:
You paid a shareholder $150 in REIT dividends and $20 from a mutual fund during the year. As the total dividend paid is more than $10, you must file Form 1099-DIV for that recipient.
Additional Notes for Payers
- Foreign tax & country: Report foreign tax paid in Box 7 and the foreign country/U.S. possession in Box 8.
- Liquidations: Report cash liquidation payouts in Box 9 and noncash in Box 10 (threshold $600 or more).
- Credit-union “dividends”: These are typically interest to members report on Form 1099-INT, not DIV.
- Patronage dividends: Use Form 1099-PATR, not DIV.
- S-corp distributions: Usually flow via Schedule K-1; however, amounts paid out of accumulated earnings & profits are dividends and must be reported on Form 1099-DIV.
| Factor | 1099-INT | 1099-DIV |
|---|---|---|
| Objective | Reporting interest income (bank interest, bond stated interest, savings bonds, etc.) Note: Report OID on Form 1099-OID (not 1099-INT), except OID on obligations with a term of 1 year or less, which is reported on Form 1099-INT. |
Reporting cash & non-cash dividends and capital-gain and liquidation distributions. |
| General threshold | $10 or more total for amounts reportable in Boxes 1/3/8 $600+ of interest paid in the course of your trade or business (e.g., late-payment interest) Any amount if federal backup or foreign tax was withheld |
$10 or more in dividends/other reportable distributions $600 or more in liquidation distributions Any amount if foreign tax paid or backup withholding applied |
| Common boxes | Box 1: Interest income Box 2: Early withdrawal penalty Box 4: Federal income tax withheld Box 6: Foreign tax paid Box 7: Foreign country or U.S. possession Box 8: Tax-exempt interest Box 9: Specified private-activity bond interest |
Box 1a: Ordinary dividends Box 1b: Qualified dividends Box 2a: Total capital-gain distributions Box 2d: Collectibles (28%) gain Box 3: Nondividend distributions Box 5: Section 199A dividends Box 7: Foreign tax paid Box 8: Foreign country/U.S. possession |
| Who pays | Banks, credit unions, and businesses that charge late-payment interest | Corporations, mutual funds, REITs, brokerage nominees |
| Recipient of copy | Individuals Note: Corporations are generally exempt recipients—no Form 1099-INT required unless an exception applies (e.g., credits to holders of certain tax credit bonds) |
Individual shareholders (most corporations excluded) |
Common Filing Errors and Quick Fixes
| Mistake | Risk | Fast Fix |
|---|---|---|
| Omitting Box 4 backup withholding on 1099-INT | Recipient can’t claim withholding credit; incorrect-return penalties | File a “CORRECTED” 1099-INT, adding Box 4, and furnish it to the recipient. Also, verify deposits and amend Form 945 if needed. |
| Not filing 1099-INT because no tax was withheld (even when the threshold was met) | Failure-to-file exposure | File the missing 1099-INT as early as possible—if within 30 days of the due date, you may stay in Tier-1 penalty. |
| Sending 1099-INT to an exempt corporation | Unnecessary filing; potential name/TIN notice chain | Void the erroneous return by filing a corrected 1099-INT with $0 amounts and “CORRECTED” checked. Additionally, notify the recipient and suppress future reporting. |
| Missing the FATCA checkbox | Incorrect Chapter 4 posture | File a corrected form with the FATCA box properly checked. Also, update the account FATCA classification in your records. |
| Misclassifying credit-union “dividends” as 1099-DIV | Recipient mismatch issues; possible CP2000; duplicate income | Void the 1099-DIV and issue 1099-INT (Box 1) for the amount, and send corrected copies and update payer records as well. |
| Foreign tax left blank on 1099-DIV | The recipient loses the foreign tax credit detail | File a corrected 1099-DIV, completing Box 7 and Box 8, and refurnish to the recipient. |
| Splitting one payment across both forms | Double reporting and higher penalties | Void the incorrect form and keep a single accurate form for that payment, and confirm totals after correction. |
Tip: 1099Online auto-detects many of these issues during import, reducing rejections and correction costs.
Avoiding Penalties and Requesting Relief
If an error slips through when you file 1099 forms online, act fast. Correcting errors within 30 days after the due date incurs a $60 penalty per information return. Corrections made within 31 days and by August 1 get a $130 penalty, and those made after August 1 incur a $340 penalty per return (based on the penalty tier for filing year 2026). Cases of intentional disregard carry a penalty of at least $680 per information return, with no maximum.
1099Online supports quick correction workflows, allowing you to generate corrected files quickly and keep electronic proof for audits.
Additionally, automated deadline reminders, bulk uploads, and duplicate-TIN detection in 1099Online make it easier to stay compliant year after year. The platform also supports CF/SF integration to help you stay compliant across jurisdictions.
Note: The IRS CF/SF Program forwards original and corrected information returns to participating states for approved filers, but the IRS acts only as a forwarding agent some participating states still require their
own notifications or direct filings. Confirm current requirements with each state.
FAQs
1. Can a recipient get both forms in the same year?
Yes. If a recipient earns both interest and dividends from the same or different payers they may receive both Form 1099-INT and Form 1099-DIV.
2. What should I do if I file the wrong form?
Corrections within 30 days of the due date incur a $60 penalty; by August 1, it’s $130, after August 1, it’s $340, and at least $680 for intentional disregard.
3. Are dividend reinvestments reportable?
Yes, remember that even reinvested dividends count as income, and 1099 filing requirements state that these also belong on Form 1099-DIV (Box 1a) when the $10+ threshold (or any backup/foreign tax withholding) applies.
4. How can I e-file 1099 forms efficiently?
Upload your data once in 1099Online, select INT, DIV, or both, and the system files with the IRS via IRIS. For states, the IRS forwards original and corrected returns to participating state agencies through the Combined Federal/State Filing (CF/SF) Program for approved filers some states still require separate state filing.
5. Do I need to file 1099-DIV for payments under $10?
Generally, you don’t need to file Form 1099-DIV if total dividends/distributions are under $10. However, you must file if any federal income tax (backup withholding) or foreign tax was withheld, and you must file for $600 or more in liquidation distributions. Having said that, optional filing below thresholds is permitted.
Bottom Line
Knowing how to file 1099-INT and 1099-DIV forms online (if you are required to e-file) protects your business from IRS penalties and recipient disputes. Avoid manual errors, missed deadlines, and mismatched data by preparing, validating, and e-filing your 1099 forms securely with 1099Online.
Get Fast and Easy 1099 E-Filing with 1099Online Today