How much tax do I pay for gains on an online savings account?

Question

Hi,

Could anybody tell me how much tax has to be paid on any gains produced by an online savings account? An average, a maximum or more precise data would be appreciated!

Thanks in advance.

Say I am in the 25 or 33% tax braket and earn arround 10,000-20,000 in interest a year from my savings account (given the initial deposit ammount)

Answer 1

You should be mailed a 1099-INT from your financial institution. You should also be able to veiw your 1099-INT forms on-line considering it's an online bank. You add your taxable interest *to* your yearly wages to get your adjusted gross income. So you are not just taxed on interest- it's your income as a whole. After subtracting your deductions, you should get your taxable income. You then use the tax tables to figure your tax. Depending on your credits, only you can figure out how much taxes you will have to pay. Here is a link to the 2006 tax tables:

http://www.irs.gov/pub/irs-pdf/i1040tt.pdf?portlet=3

Answer 2

it all depends on how much you made and how much interest you earned in this account. If its under $100 (chances are it is) it has little effect on it.