If you are receiving the promissory interest, enter it as if you received form 1099-INT. In the Received from box, you may enter Promissory Note Interest Income and the name and any tax ID, if you have it. Only the amount is required however.

See Where do I enter Form 1099-INT? @armondand

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"

HelenaC

Employee

See Where do I enter Form 1099-INT?

If you are paying the promissory interest and this is a personal loan, you can't deduct the interest. According to the IRS, only a few categories of interest payments are tax-deductible:

Interest on home loans (including mortgages and home equity loans)
Interest on outstanding student loans
Interest on money borrowed to purchase investment property
Interest as a business expense

All other interest is considered personal interest, which includes interest charged on credit cards, auto loans, unpaid utility bills and late payment or underpayment of federal, state and local income taxes.

lychee

If paying, would I have to report it to the IRS, eg prepare and file a 1099-INT with IRS and a copy to the creditor?

JamesG1

IRS Instructions page 1 for forms 1099-INT states the filing requirements:

File Form 1099-INT, Interest Income, for each person:

To whom you paid amounts reportable in boxes 1, 3, or 8 of at least $10 (or at least $600 of interest paid in the course of your trade or business described in the instructions for Box 1. Interest Income, later);
For whom you withheld and paid any foreign tax on interest; or
From whom you withheld (and did not refund) any federal income tax under the backup withholding rules regardless of the amount of the payment.

@lychee

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"