Form 1099-OID: Original Issue Discount
Report original issue discount on debt instruments of $10 or more.
Filing Deadline
January 31 (to recipient) / February 28 (paper) or March 31 (e-file) to IRS
Threshold
$10 or more of OID for the year
Taxable
OID is taxed as interest income annually
Overview
Form 1099-OID reports original issue discount (OID) on bonds and other debt instruments. OID is the difference between the stated redemption price at maturity and the issue price, representing a form of interest.
Even though holders don't receive cash payments, they must include OID in income each year as it accrues. This is commonly seen with zero-coupon bonds and certain other debt securities.
Who Must File
Required Filers
- •Brokers and financial institutions that hold OID debt instruments
- •Bond issuers and their agents
- •Required when OID is $10 or more for the calendar year
- •Must report even if holder doesn't receive actual cash
Exceptions & Notes
- ✕U.S. Savings Bonds (Series EE, I, etc.) - holders report on their own
- ✕Tax-exempt obligations - use Form 1099-INT instead
- ✕Short-term obligations (one year or less from issue) generally exempt
Form Structure & Instructions
Here's what information is required in each section:
OID and Interest Information
Discount and interest accrued
Bond Premium and Acquisition Information
Additional details affecting taxable amount
Important Filing Notes
Annual Income Recognition
OID must be included in income each year as it accrues, even though no cash is received. This increases your basis in the bond.
Acquisition Premium
If you bought the bond at a premium (above issue price but below redemption price), acquisition premium reduces the amount of OID you must report.
De Minimis Rule
If OID is less than 0.25% of the stated redemption price times the number of full years to maturity, it's considered de minimis and not reported as OID.
Sale Before Maturity
If you sell an OID bond before maturity, you must report the accumulated OID up to the sale date, which increases your basis for calculating gain or loss.
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