If the IRS sent you a statement showing interest income, it’s a Form 1099-INT reporting interest the agency paid you on a delayed refund. The amount in Box 1 is taxable, and you report it on your federal return for the year you received it, just as you would interest from a bank.1Internal Revenue Service. About Form 1099-INT, Interest Income
Why You Got a 1099-INT From the IRS
Your refund is your own money. The interest is separate. Federal law gives the IRS 45 days from the filing deadline (or from the date it received a late return) to send your refund without owing you anything extra. Miss that window, and interest starts running on the full refund amount.2Internal Revenue Service. Interest – Section: When Does the IRS Pay Interest?
The rate for individuals is the federal short-term rate plus three percentage points, and it changes every quarter.3Office of the Law Revision Counsel. 26 U.S. Code 6621 – Determination of Rate of Interest The IRS is required to send Form 1099-INT once the interest it paid you during the calendar year reaches $10.1Internal Revenue Service. About Form 1099-INT, Interest Income Below that, no form arrives, but the income is still taxable and still belongs on your return.
What the Form Shows
The number that matters is Box 1, “Interest Income.” That’s the taxable figure. Check that your name and Social Security number match your records before you file, because the IRS matches the form against your return and even a small mismatch can trigger a notice.
Where to Report It on Your Return
IRS refund interest goes on Line 2b of Form 1040, the same line used for interest from banks, CDs, and bonds.4Internal Revenue Service. 1040 (2025) – Section: Line 2b The refund itself is not income and doesn’t appear anywhere on your return.
If your total taxable interest from all sources for the year is more than $1,500, you also need to complete Schedule B and list the IRS as the payer in Part I, alongside the Box 1 amount. The Schedule B total flows to Line 2b of Form 1040.5Internal Revenue Service. About Schedule B (Form 1040), Interest and Ordinary Dividends6Internal Revenue Service. 2025 Schedule B (Form 1040) At $1,500 or less, you can skip Schedule B and enter the interest directly on Line 2b.
The IRS runs an automatic match between the 1099-INT it issued and what you reported. Numbers that don’t line up produce a notice, so it’s worth getting the entry right the first time.
If the Form Is Missing or Wrong
If you’re expecting a 1099-INT that never came, sign in to your IRS Online Account at irs.gov, which displays certain information returns.7Internal Revenue Service. Online Account for Individuals You can also pull a Wage and Income Transcript, which lists everything the IRS has on file for you. Transcripts are available through your online account, by calling 800-908-9946, or by submitting Form 4506-T.8Internal Revenue Service. Transcript Types for Individuals and Ways to Order Them
If the amount on the form looks wrong, call 800-829-1040 and ask for a corrected 1099-INT. Have your name, address, Social Security number, and the payment details ready.9Internal Revenue Service. What to Do When a W-2 or Form 1099 Is Missing or Incorrect Don’t let the filing deadline pass while you wait. If a corrected form hasn’t arrived in time, report the amount you believe is accurate from your own records.
Two Things That Catch People Off Guard
State Tax Treatment
Interest on U.S. Treasury bonds, bills, and notes is exempt from state and local income tax.10Internal Revenue Service. Topic No. 403, Interest Received IRS refund interest is not a Treasury obligation, so most states treat it as ordinary interest income and tax it. Check your state’s rules; some states have no income tax and others categorize interest differently.
A Possible Estimated Tax Penalty
Refund interest usually shows up as a lump sum you didn’t plan for. If it’s big enough to push your total tax owed well above what withholding and estimated payments have already covered, you could get hit with an underpayment penalty for the quarter you received it.11Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty
The annualized income installment method on Schedule AI of Form 2210 can reduce or wipe out that penalty by matching the income to the quarter it actually arrived. Check Box C in Part II of Form 2210, complete Schedule AI, and file the form with your return.12Internal Revenue Service. Form 2210 – Underpayment of Estimated Tax by Individuals, Estates, and Trusts Skip it and the IRS calculates the penalty as if the interest had been spread evenly across all four quarters.