If you paid $600 or more in interest on a loan during the year, and you paid it in the course of running a trade or business, you generally need to issue Form 1099-INT to the lender and file a copy with the IRS. If either piece is missing — the dollar threshold or the business context — you do not. A handful of lender types are exempt even when both conditions are met, and mortgage interest and credit card interest follow different rules entirely.
The Two Conditions That Trigger the Form
Both of these have to be true before you owe a 1099-INT:
- Total interest paid to a single recipient during the calendar year reaches $600 or more.
- You paid that interest in the course of a trade or business.1Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID
Trade or business covers any activity carried on for profit, whether you operate as a sole proprietor, partnership, LLC, or corporation. An LLC that borrows from a private lender to buy a rental property and pays $1,200 in interest that year has clearly met both tests and needs to file. Monthly payments add up across the year, so keep an amortization schedule that separates interest from principal; the $600 test looks at the annual total, not any single payment.
When You Do Not Have to Issue a 1099-INT
Personal Loans Between Individuals
A loan taken out for non-business reasons sits outside the requirement. Borrow $20,000 from a relative to remodel your kitchen, pay $900 in interest, and no 1099-INT is required from you. The lender still owes income tax on the interest, but you are not the one who has to report it.2Internal Revenue Service. Topic No. 403, Interest Received
Loans to Exempt Recipients
Even when the interest was paid in a business context and cleared $600, some lenders are exempt from receiving a 1099-INT. The IRS instructions list corporations, tax-exempt organizations, IRAs, health savings accounts, U.S. government agencies, states, U.S. territories, registered securities and commodities dealers, brokers, and nominees or custodians.1Internal Revenue Service. Instructions for Forms 1099-INT and 1099-OID Most banks and institutional lenders fall into this bucket because they are organized as corporations, which is why business borrowers rarely issue 1099-INTs to their bank.
Do not rely on assumptions about the lender’s entity type. Get a completed Form W-9 that identifies the lender’s classification and exemption status, so you have documentation if the IRS ever asks.3Internal Revenue Service. Instructions for the Requester of Form W-9
Mortgages and Credit Cards
Home mortgage interest is reported by the lender on Form 1098, not by the borrower on a 1099-INT.4Internal Revenue Service. Instructions for Form 1098 (12/2026) Interest on credit cards and other revolving charge accounts is also excluded, so a balance carried on a business credit card does not produce a filing obligation for you.
Loans Used Partly for Business
When borrowed funds serve both business and personal purposes, only the business share of the interest counts toward the $600 threshold. A consultant who uses 75% of a loan for business expenses and 25% for a personal trip counts only that 75% share of the interest. Track the allocation from the day the money hits your account, not at filing time.
Get a W-9 Before the First Payment
Request a completed Form W-9 from the lender before you pay any interest. The W-9 gives you the lender’s full legal name, address, taxpayer identification number, and entity type. Having it signed and on file protects you from penalties for missing or incorrect TINs and settles the exemption question in writing.
If the lender ignores repeated requests or gives you a TIN the IRS later says is wrong, you must start backup withholding at a flat 24% on future interest payments and send those amounts to the IRS.5Internal Revenue Service. Backup Withholding Backup withholding also applies if the IRS notifies you the lender has underreported interest on prior returns.6Internal Revenue Service. Topic No. 307, Backup Withholding It is not optional. Failing to withhold when required carries the same exposure as failing to file the 1099-INT itself. Document every W-9 request in writing; the IRS looks at whether you exercised due diligence.
Deadlines and How to File
The recipient’s copy of Form 1099-INT is due by January 31 of the year after the interest was paid. For the 2025 tax year, that deadline moves to February 2, 2026, because January 31 falls on a Saturday. You can send the recipient copy by mail or, with the lender’s consent, electronically.7Internal Revenue Service. General Instructions for Certain Information Returns (2025)
Paper copies filed with the IRS are due by the last day of February, which shifts to March 2, 2026, for the same weekend reason. A paper filing needs Form 1096 as a cover sheet summarizing the totals from all your 1099-INTs.8Internal Revenue Service. About Form 1096, Annual Summary and Transmittal of U.S. Information Returns Electronic filing gets you until March 31.
Electronic filing is mandatory if you file 10 or more information returns of any type during the year. The threshold dropped from 250 to 10 starting in 2024, and the count aggregates across form types: five 1099-NECs plus five 1099-INTs hits 10, so all of them have to be e-filed.9Internal Revenue Service. Topic No. 801, Who Must File Information Returns Electronically
Keep copies of every 1099-INT you file and the matching W-9 for at least three years from the filing date.10Internal Revenue Service. How Long Should I Keep Records?
Penalties If You Skip It or File Late
Penalties are assessed per return and climb the longer you wait. For returns due in 2026:
- Filed within 30 days of the deadline: $60 per return.
- Filed after 30 days but by August 1: $130 per return.
- Filed after August 1 or not filed at all: $340 per return.
- Intentional disregard: $680 per return, with no annual cap.
Annual maximums apply to everything except intentional disregard. Businesses with gross receipts over $5 million cap out at $683,000, $2,049,000, and $4,098,500 across the three tiers. Businesses at or under $5 million cap out at $239,000, $683,000, and $1,366,000.11Internal Revenue Service. 20.1.7 Information Return Penalties The same tiered penalties apply separately to incorrect statements furnished to recipients, so a single missed filing can produce two penalties.
The IRS can waive penalties for reasonable cause if you show you acted responsibly both before and after the failure and that the failure came from circumstances outside your control, such as a natural disaster, serious illness, or an agent’s error.12Internal Revenue Service. 13Internal Revenue Service. General Instructions for Certain Information Returns The two-step sequence feels backward, but it is the only way the IRS can match the fix to the original filing.
Family and Below-Market Loans
The 1099-INT question and the below-market loan question are separate. If you are the borrower on a personal family loan, no 1099-INT is required from you no matter how the interest rate is set. But federal law treats a loan carrying interest below the applicable federal rate as a below-market loan, and the IRS can impute interest at the AFR to the lender even if the lender never collected it.14Office of the Law Revision Counsel. 26 U.S. Code 7872 – Treatment of Loans With Below-Market Interest Rates Loans of $10,000 or less between individuals are generally exempt from that rule, provided the borrower does not use the money to buy income-producing assets. That is a lender-side income tax issue, not a borrower-side reporting issue, but it is worth knowing before you set the rate on a family loan.
What Lenders Should Know
The lender owes income tax on interest received whether or not a 1099-INT ever arrives.2Internal Revenue Service. Topic No. 403, Interest Received A missing form does not reduce the tax. Private lenders should keep their own payment records rather than count on the borrower to generate accurate documents.