What is the correct treatment of interest income for an account holder who receives a Form 1099-INT?

Interest income reported on Form 1099-INT is considered taxable income by the IRS. This type of income must be included when calculating an individual's gross income. The correct treatment for an account holder receiving a Form 1099-INT is to include the amount indicated on the form in their taxable income. This is required regardless of the amount; even small amounts of interest from bank accounts or other sources must be reported.

While it might seem beneficial to exclude or report interest under specific conditions (like the dollar threshold noted in some options), the tax obligation remains for the full amount of interest stated on the 1099-INT. Therefore, acknowledging this income is crucial for accurate tax reporting and compliance with IRS regulations.