Does the IRS charge tax on the CD profits that I make?

Question

Does the IRS charge tax on the CD profits that I make?

Answer 1

yes

Answer 2

Absolutely

Answer 3

The interest your CD earns is taxable income, yes.

Answer 4

Yes.  You will get a 1099-INT form from the bank every year reporting the interest on your CD.  A copy of that also goes to the IRS.  If your income from interest and dividends combined is $1500 or more you must fill out Schedule B.  If its less it goes on the main form, 1040, 1040A or 1040EZ, whichever one you use.

Answer 5

Yes.

At the end of the year, your bank will send the IRS a form showing how much interest you made.  Your bank will also send that to you.  You will have to report it on your income tax as income.

If you do not make more than the minimum the IRS requires, you will not have to pay tax.  Check out http://www.irs.gov

Answer 6

The only way CD interest would NOT be taxed is if it remains in a Roth IRA or other type of tax free retirement account.  Even in a regular IRA or other tax deferred retirement accounts, any gains would eventually be taxed when the money was withdrawn (unless erased by other losses in that type of account).

In any taxable account you pay tax the tax year you have any gains, unless offset by capital losses that year or carried over from previous years.

Answer 7

You bet.  See Form 1040 Schedule B.