IRS 1099-OID Form - Overview

Updated on October 16, 2023 - 15.00 AM by Admin, TaxBandits

Form 1099-OID is an IRS tax form that is used to report OID taxes on certain debt instruments. It is submitted by the holder of debt instruments (bonds, notes, certificates of deposit (CDs), etc.) which were issued at a discount price less than the actual redemption price when it matured.

In this article, we cover the following topics:

1. What is Form 1099-OID?

Form 1099-OID is an IRS tax form that is used to report OID on certain debt instruments. This means that debt instruments were issued at a lower price than they will be worth when reaching maturity.

For example, let's assume you sold a bond with a face value of $500 at a discount price of $400 to an investor. At the time when the bond matures, the bondholder will receive the face amount of $500 despite paying only $400 for the bond. The Discount Price (OID) is treated as taxable because it accrues over the term of the bond.

2. What is a 1099-OID Form used for?

The Form 1099-OID is used to report the OID (Original Issued Discount) included in your taxable income of at least $10. However, the rule of including OID in your gross income is generally not applicable to tax-exempt obligations, U.S. Savings bonds, and loans of $10,000 or less (between individuals who do not belong to financial business).

3. Who Must File Form 1099-OID?

Generally, the holder of the debt instruments is required to file Form 1099-OID. As for the investors, they do not need to issue Form 1099-OID unless they pay OID to another person.

Form 1099-OID must be issued in the following scenarios:

  • When someone receives reportable OID includible in the gross income of at least $10
  • When they withhold and pay any foreign exchange tax on OID for someone
  • When they withhold and didn’t refund any federal tax under the backup withholding rule for someone. Even if the amount is less than $10.

4. When is the Deadline to
File Form 1099-OID?

For the 2023 tax year, the deadlines for filing Form 1099-OID are as follows:

  • Deadline to distribute recipient copies - January 31st, 2024.
  • Deadline to file paper copies with the IRS -
    February 28th, 2024.
  • Deadline to file electronic copies with the IRS - April 1, 2024

5. IRS Form 1099-OID Filing Methods

Filling Form 1099-OID can be filed using one of two different methods, Paper filing or E-filing.

Paper filing:

The IRS accepts paper copies of Form 1099-OID. However, if you are filing more than 10 aggregate returns, businesses are required to e-file. Paper filing is quite time-consuming, and you may not know the filing status.

Electronic filing:

E-filing is the most accurate, and nowadays the most common method of filing tax forms. The IRS recommends e-filing as opposed to filing paper copies. Electronic copies are generally more accurate, contain far fewer errors, and the IRS status of these returns can be tracked.

TaxBandits supports e-filing Form 1099-OID. Get started today and get the seamless efile experience that TaxBandits has to offer!

Note: Based on the filing method you choose, the deadline varies. If you prefer paper filing, submit the forms to the IRS on or before February 28th, 2024. If you choose to e-file Form 1099-OID, the deadline will be April 1st, 2024.

6. E-file Form 1099-OID With TaxBandits in Minutes

TaxBandits is an IRS-authorized e-file provider that supports a variety of payroll and employment tax forms, including Forms 1099, W-2, 94x, 1095, and more.

  • Step 1: Create an account with TaxBandits
  • Step 2: Enter the necessary information on Form 1099-OID
  • Step 3: Review and transmit the form to the IRS

Get started with TaxBandits today. E-file Form 1099-OID in minutes and get instant updates about the filing status. Pricing starts as low as $0.80/form.