1099 Forms › What is Form 1099-OID? Original Issue Discount Reporting
At a Glance
Understanding IRS Form 1099-OID
Form 1099-OID (Original Issue Discount) is used to report original issue discount income on debt instruments such as bonds, notes, and certificates of deposit. OID occurs when a debt instrument is issued for less than its stated redemption price at maturity.
Who Must File Form 1099-OID?
Form 1099-OID must be filed by:
- Banks and financial institutions that issue debt instruments with OID
- Corporations issuing bonds or notes at a discount
- Brokers and other intermediaries holding OID instruments for customers
- Any issuer of a debt instrument with OID of $10 or more
Form 1099-OID Box Breakdown
| Box | Description |
|---|---|
| 1 | Original issue discount for the year |
| 2 | Other periodic interest |
| 3 | Early withdrawal penalty |
| 4 | Federal income tax withheld |
| 5 | Market discount |
| 6 | Acquisition premium |
| 8 | OID on U.S. Treasury obligations |
| 9 | Investment expenses |
| 10 | Bond premium |
| 11 | Tax-exempt OID |
What is Original Issue Discount?
Original issue discount is the difference between the stated redemption price of a debt instrument at maturity and its issue price. The OID is treated as interest income and must be included in income over the life of the debt instrument, even if the holder does not receive any payments during the year.
For example, if a bond with a face value of $1,000 is issued for $950, the $50 difference is the original issue discount.
E-File Form 1099-OID with BoomTax
E-file your Form 1099-OID with the IRS using BoomTax. Our platform handles bulk filing for financial institutions and corporations.
Import Your Form 1099-OID Data
You can import your data as Excel, XML, or use files from popular payroll providers like QuickBooks, UKG, ADP, and many more.
Step-By-Step Wizard
We walk you through the process with no complicated jargon. You can also live chat with a real person as you work on your filing for hands-on help.
E-File & Mail Employee Copies
Once your data is loaded, you can e-file and distribute employee copies in minutes.
Filing Deadlines
- Recipient copy: January 31
- IRS filing (paper): February 28
- IRS filing (electronic): March 31
External Resources
Frequently Asked Questions About Form 1099-OID
Form 1099-OID must be filed when the original issue discount for the year is $10 or more. This threshold applies to each debt instrument separately. Even if the total OID across multiple instruments exceeds $10, you only file for those individual instruments that meet the threshold.
Yes, for tax purposes, OID is treated as interest income. The key difference is that OID must be recognized over the life of the debt instrument, even if no cash payments are received. This is sometimes called "phantom income" because you owe tax on income you have not actually received in cash.
Original Issue Discount (OID) occurs when a bond is issued at a price below its face value. Market discount occurs when you purchase a bond in the secondary market for less than its adjusted issue price. Both are reported on Form 1099-OID but in different boxes: OID in Box 1 and market discount in Box 5.
Yes, Treasury bills (T-bills) are typically issued at a discount and are subject to OID rules. However, the OID on U.S. Treasury obligations is reported separately in Box 8 of Form 1099-OID. This OID is generally exempt from state and local taxes but is subject to federal income tax.
As the recipient of Form 1099-OID, you report the OID income on Schedule B (Form 1040), Part I, Line 1. The OID amount from Box 1 is added to your interest income. If you have OID on Treasury obligations (Box 8), report it separately as it may be exempt from state taxes.
Passionate about making tax compliance simple so businesses can focus on what matters.
Takes Only 30 Seconds
BoomTax and its affiliates do not provide tax, legal, or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors prior to engaging in any transaction.