You Make the Call - July 9, 2026

Q: Jordan, aged 40, invested in bonds during the year and later received both Form 1099-INT, Interest Income, and Form 1099-OID, Original Issue Discount (OID). Jordan is not sure whether the amounts are taxable. How should Jordan properly report the bond income at the federal level? 

A:  Jordan must report the bond income on the federal income tax return based on its character. Taxable bond interest and taxable original issue discount (OID) are generally reported as taxable interest on Form 1040, U.S. Individual Income Tax Return, Line 2b. Tax-exempt interest or tax-exempt OID, if any, is reported on Form 1040, Line 2a. 

Form 1099-INT reports Jordan’s bond interest income. If the amount is reported in Box 3, Interest on U.S. Savings Bonds and Treasury Obligations, the interest is generally taxable for federal income tax purposes and reported on Line 2b of Form 1040. Tax-exempt interest or tax-exempt OID, if any, is reported on Form 1040, Line 2a. 

Jordan may need to file Schedule B (Form 1040), Interest and Ordinary Dividends, if taxable interest exceeds $1,500 or if another Schedule B reporting condition applies, such as accrued interest, amortizable bond premium, nominee interest, reporting less OID than shown on Form 1099-OID, excluding eligible U.S. savings bond interest used for qualified education expenses or certain foreign account reporting requirements. 

If Schedule B is required, Jordan lists each payer and the interest or OID amount in Part I and carries the taxable interest from Schedule B, Line 4, to Form 1040, Line 2b. If Jordan reports less OID than the amount shown in Box 1 or Box 8 of Form 1099-OID, Jordan lists the full OID on Schedule B, Part I, Line 1, then enters “OID Adjustment” and subtracts the OID not required to be reported.