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Yes, this is really a Q for my accountant, but I won't be seeing him until the beg of March, and I am curious now
I opened a CD with my bank in Feb. Meaning it will mature end of Feb, '24. The money gained is taxable income - I get that. All of that money goes right back into the CD; I have not withdrawn anything. Because of that, I assume that I do not pay income tax on anything for year 2023; that taxes would be owed for year 2024, which I will pay by 4/15 2025. Is this correct?
Assuming yes... if I re-open the CD after it is matured, putting all of the profit back in and taking nothing, do I pay taxes on that money gained? Or do I wait until the CD is fully matured, and I make a withdrawal?
Yes, this is really a Q for my accountant, but I won't be seeing him until the beg of March, and I am curious now
I opened a CD with my bank in Feb. Meaning it will mature end of Feb, '24. The money gained is taxable income - I get that. All of that money goes right back into the CD; I have not withdrawn anything. Because of that, I assume that I do not pay income tax on anything for year 2023; that taxes would be owed for year 2024, which I will pay by 4/15 2025. Is this correct?
Assuming yes... if I re-open the CD after it is matured, putting all of the profit back in and taking nothing, do I pay taxes on that money gained? Or do I wait until the CD is fully matured, and I make a withdrawal?
You'll get a 1099-INT statement from the bank by the end of January for any interest earned during 2023. That's the amount you need to report to IRS for 2023.
OP, your bank will send you a form 1099 INT in early 2024 for taxable interest they paid to you in 2023 for this particular CD or any other account or CD that you had with them.
It is simple. Look at the taxable amount of interest shown on that 1099 INT form from the bank and enter that onto your interest income that gets listed typically on Schedule B for your IRS form 1040. There is nothing to guess about or assume, because all the IRS cares about is what is shown as taxable interest on the 1099 INT form.
Yes, this is really a Q for my accountant, but I won't be seeing him until the beg of March, and I am curious now
I opened a CD with my bank in Feb. Meaning it will mature end of Feb, '24. The money gained is taxable income - I get that. All of that money goes right back into the CD; I have not withdrawn anything. Because of that, I assume that I do not pay income tax on anything for year 2023; that taxes would be owed for year 2024, which I will pay by 4/15 2025. Is this correct?
Assuming yes... if I re-open the CD after it is matured, putting all of the profit back in and taking nothing, do I pay taxes on that money gained? Or do I wait until the CD is fully matured, and I make a withdrawal?
You will get a 1099 from the financial institution for the year in which any interest was taxable.
Edited to Add: Apologies for the redundant post.
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