Form 1099-INT Explained for Australians | 2025 Tax Guide

If you’re an Australian with money stashed in a U.S. bank account or investments generating interest stateside, there’s a good chance you’ll encounter Form 1099-INT. While it’s a staple of the American tax system, Aussies with cross-border financial lives need to understand its purpose, reporting requirements, and implications for their own tax filings—especially with 2025’s evolving international tax transparency standards.

What is Form 1099-INT?

Form 1099-INT is an IRS tax document issued by American banks, credit unions, and other financial institutions to report interest income of USD $10 or more paid to account holders during the year. The form details the amount of interest earned, federal tax withheld (if any), and other important information. Australians who receive one—whether they’re U.S. residents or not—may need to report this income to both the IRS and the ATO, depending on their residency and tax obligations.

• Who gets a 1099-INT? Any individual or entity (including non-U.S. residents) with U.S. bank or investment interest income.
• What’s reported? Interest earned, early withdrawal penalties, and federal tax withheld.
• Why does it matter for Australians? Foreign income, including U.S. interest, may be taxable in Australia—especially under the ATO’s global income rules.

2025 Tax Updates: Cross-Border Compliance Gets Tighter

International tax authorities, including the ATO, have ramped up data-sharing agreements and compliance measures. In 2025, the U.S. continues to participate in the Foreign Account Tax Compliance Act (FATCA), which means Australian residents with U.S. accounts could see more scrutiny. The ATO routinely receives information about Australians’ U.S. financial assets and income, including details from 1099-INT forms, under the Common Reporting Standard (CRS).

• Increased ATO–IRS data matching: Expect the ATO to know about your U.S. interest income, even if you forget to declare it.
• Double taxation risks: The Australia–U.S. tax treaty typically prevents double taxation, but you must declare the income on both returns (if required) and claim credits as appropriate.
• Penalties for non-disclosure: Failing to report offshore interest income can attract significant penalties, especially with the ATO’s 2025 enforcement focus on foreign assets.

How Australians Should Handle Form 1099-INT

Received a 1099-INT in your mailbox (or inbox) this year? Here’s what to do:

1. Check your residency status: If you’re an Australian resident for tax purposes, you must declare worldwide income, including U.S. interest. Temporary residents may have different obligations.
2. Convert currency accurately: Report the interest income in AUD using the ATO’s official exchange rates for the year in which the income was earned.
3. Declare on your tax return: Include the U.S. interest in your Australian tax return. Even if U.S. tax was withheld, you may be able to claim a foreign income tax offset.
4. Retain documentation: Keep your 1099-INT and any correspondence from your U.S. financial institution. The ATO may request proof of foreign income and taxes paid.

For example, if you earned USD $150 in interest from a U.S. bank account in 2024, and received a 1099-INT, you would convert this amount to AUD using the average exchange rate for the year and report it in your 2024–25 Australian tax return. If U.S. tax was withheld, claim an offset to avoid double taxation.

Common Traps and 2025 Best Practices

• Don’t ignore small amounts: Even modest interest income (above AUD $1) must be reported to the ATO.
• Watch for U.S. withholding: Non-U.S. residents often have 30% tax withheld. Ensure you’re not taxed more than necessary—complete a W-8BEN form with your U.S. bank if eligible for treaty benefits.
• Keep up with changes: The ATO’s 2025 focus includes increased audits of Australians with overseas accounts, especially following new data-sharing protocols.

Conclusion

Form 1099-INT isn’t just an American tax form—it can have real consequences for Australians with U.S. interest income. With cross-border data sharing and stricter enforcement in 2025, it’s crucial to declare all overseas earnings, keep accurate records, and claim available credits or offsets. Don’t let a simple form become a tax headache—stay proactive, organised, and compliant.