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OID is not required to be included in income annually on personal notes. You can although make an election to include it annually, whether or not cash is received. See the link below & "Regulations section 1.1272-3."
I am assuming that you purchased these notes from someone else, probably at a discount from face value, is that correct? If that is correct you may also have market discount to consider. Market discount is basically the difference in the price you paid for the notes vs. the face value of the notes.
See also Publication 550 here (Market Discount Bonds)
Regulations section 1.1272-3 - http://law.justia.com/cfr/title26/26-126.96.36.199.188.8.131.52.html
I hope this helps, please let me know if you have any further questions.
The notes were purchased through a service, specifically, Lending Club and Prosper which are peer to peer lending groups that provide loans to individuals by investors such as myself. The borrowers want to borrow say $1000 for 3 years at 11.99% then investors choose to fund the loan; I funded $100 of said loan while other investors funded the remainder of the loan with varying amounts. I then receive monthly payments of $3.32 a month for the next 36 months that are deposited to my account. Over the 3 years, assuming all payments are made, I will receive a total of $119.55. It's the $19.55 that I thought would be considered interest income; however, according to Lending Club, this would be reported to me on a 1099-OID form if I met the $10 per year, per note on interest. Although I did not receive this form, since I did not meet this threshold, it is still reported to the IRS as 1099-OID.
It's the $19.55 that I thought would be considered interest income - yes this would be interest income and since you bought the notes from a company engaged in the business of making such loans then this would be OID.
according to Lending Club, this would be reported to me on a 1099-OID form if I met the $10 per year, per note on interest. Although I did not receive this form, since I did not meet this threshold, it is still reported to the IRS as 1099-OID. - OK I didn't know that the loans were made by a business selling them. Based on this, yes the interest would be considered OID.
Is there a SIMPLE calculation as to figure how to claim the income on my taxes? - Not really, the calculation is a little complex. If you never received a 1099OID from the payor then I presume the amount is insignificant. The simplest approach would simply be to report the income as interest as it is received. (No sense in going through the OID aggravation for a deminimus amount)
If the loans are significant then try and look to Regulation 1.1272-1 (below) for additional guidance on how to calculate the OID. http://law.justia.com/cfr/title26/26-184.108.40.206.220.127.116.11.html