What is a Form 1099-OID?

Modified on Thu, 25 Jan 2024 at 01:48 AM

To understand Form 1099-OID, it’s helpful to first understand what an OID is. 

 

Bonds can sometimes be issued at a price lower than their face value, which is known as a discount. An Original Issue Discount (OID) is the difference between the original face value amount of a bond and the discounted price paid for a bond. For the purposes of taxes, the IRS generally considers an OID to be “the excess of an obligation’s stated redemption price at maturity over its issue price (acquisition price for a stripped bond or coupon).”

 

Form 1099-OID is issued if the OID (that the IRS considers includible in gross income) meets any of the following criteria:

  • at least $10

  • foreign tax was paid on the OID

  • federal income tax was withheld under the backup withholding rules

It is possible that you may receive a consolidated 1099 form from your bank. A consolidated Form 1099 may combine up to five separate 1099 forms (1099-B, 1099-DIV, 1099-INT, 1099-MISC, and 1099-OID) into one tax reporting document and will show your reportable income and transactions for the tax year from the issuer.

 

This content is provided for informational purposes only and should not be construed as tax, legal, financial, accounting, or other advice. Rules and regulations vary by location and are subject to change, so please consult with an expert if you need advice specific to you.

 

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