Anonymous
Not applicable

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I'm going to take a stab at this, but am NOT a CPA, EA, or professional preparer. Just a volunteer preparer, completed the AFPS, created a single-member disregarded-entity LLC, and trying to put the pieces together as best I can.  

 

I would think Form 1040, Line 2b (and Schedule B if required), right along with all your other interest, is the place for the 1099-INT interest income.  Why?

 

With a single-member LLC, a "disregarded entity," the IRS literally disregards that the entity exists.  You're a sole proprietor, and you're treated as one for all tax purposes.  Treat bank interest income the same, no matter what account it's in.  Bank interest is not income from business activity ("such as notes or accounts receivable" per the IRS' examples of business interest in the Schedule C instructions).

 

But, what about that EIN?  The 1099-INT has your entity's EIN on it, so isn't the IRS looking for that interest to be reported wherever you report that entity's EIN?

 

Oddly enough, the IRS isn't looking for your LLC's EIN to report any interest, because they're actually not looking for your LLC's EIN to report anything at all.

 

What?!  All that work getting an EIN for your LLC, and the IRS isn't even looking for it on your return?  Well.... yeah!  When they say "disregaded," they really mean it!  They actually specify NOT to use the entity's EIN on personal income tax forms, including Schedule C, if it's a SMLLC, unless that EIN is for one of very few specific purposes that rarely apply.  When working with personal income tax, you essentially disregard the existence of your LLC.

 

https://www.irs.gov/businesses/small-businesses-self-employed/single-member-limited-liability-compan...

 

https://www.irs.gov/instructions/i1040sc#idm140094051277488

 

When your bank reports your 1099-INT with your entity's EIN to the IRS, the IRS already knows that EIN belongs to you, and ONLY you, and that the EIN is for a disregarded entity.  So, they're going to look for that interest income to be reported where all your other interest income is: Form 1040, Line 2b (personal income, and therefore not subject to self-employment tax).

 

And as others have said, if the IRS doesn't see that interest reported there, you're likely to get a letter asking why.

 

Again, not a CPA, EA, or professional preparer, so happy to be corrected if there's a firm citation to indicate that interest reported on 1099-INT should go anywhere aside from 1040/2b.