Form 1099-OID: Original Issue Discount on Bonds, Notes, and CDs
Published November 5, 2026
Some bonds, notes, and certificates of deposit (CDs) are sold for less than their payoff amount at maturity. The gap is called original issue discount, or OID. The IRS treats that gap as interest. The payer reports it on a Form 1099-OID.
This guide explains the form in plain language. It is general information, not advice about your investments or return. OID rules can be complex, especially for bonds bought at a premium or sold before maturity. For those cases, read the IRS publications named on the form or ask a tax professional.
What OID means
The IRS instructions say OID is the excess of an obligation's stated payoff amount at maturity over its original amount. In plain words, it is the difference between the amount the borrower received when the bond was first issued and the amount you get back at the end. The IRS says OID on a taxable obligation is taxable as interest over the life of the obligation.
The obligation can be a bond, a debenture, a note, a certificate, or another written debt with a term longer than one year. The instructions say OID rules can also apply to certificates of deposit and similar deposit arrangements, especially when interest is deferred until maturity.
The boxes you are most likely to see
- Box 1 shows the OID for the part of the year you owned the obligation. The IRS says to report this amount as interest income.
- Box 2 shows the qualified stated interest for the year. This is separate from OID. If you held the obligation the whole year, report this amount as interest income.
- Box 3 shows interest or principal forfeited because you withdrew money before maturity, such as from a CD. The IRS says you may deduct this amount to figure your adjusted gross income.
- Box 4 shows any federal income tax withheld, which is backup withholding. Include it as tax withheld on your return.
- Box 10 shows bond premium, and Box 11 shows tax-exempt OID.
Other boxes cover market discount, acquisition premium, investment expenses, and certain Treasury amounts. The form points to the instructions for those items.
When the amount may not be the final answer
The IRS says that depending on the type of debt, the issue or acquisition date, and other factors, you may have to figure the correct OID yourself. For example, you may need to adjust the amount if you paid acquisition premium or bond premium. The form points to Publication 1212 for how to figure the correct OID.
The form says that if you bought or sold an obligation during the year and you are not a nominee, you are not required to issue a Form 1099-OID showing the amounts that belong to the seller or buyer. Check the statements you received from the broker or bank.
Nominees and shared ownership
If you hold an obligation for another owner, you are a nominee. The IRS instructions say you must file a Form 1099-OID for each other owner. Give each owner a Copy B. This rule matters for joint accounts and accounts held for family members.
How to report the amounts
Interest-type amounts usually go on the interest part of your return. The IRS form tells you to report Box 1 as interest income. Box 2 is also interest income when you held the obligation the whole year. Box 3 may be an adjustment, not a regular interest entry. The instructions for Form 1040 show where to take each adjustment.
Check whether the bank or broker also reported the same amount on another form, such as a Form 1099-INT. Do not count the same income twice.
Next steps
Save the Form 1099-OID with your bond or CD statements. Compare the boxes to your records. If you sold a bond early, a gain or loss may also appear on Form 8949 and Schedule D. Read Publication 550 for investment income and Publication 1212 for OID details. A tax professional can help if the numbers are complex.
Sources: Sources: IRS, Form 1099-OID (Rev. 1-2024) and its instructions (https://www.irs.gov/pub/irs-pdf/f1099oid.pdf); Publication 550 and Publication 1212, as referenced on the form This is general information, not advice about your specific return.
