What happens if I don't file my income from CD?

Question

I have money at the bank on CD, my income for last year is $900. What happens if I don't claim it?

Answer 1

The IRS already knows about that interest; they got a copy of the Form 1099-INT that your bank gave you. When they run your return for income matching -- probably in a year or two -- they'll notice that you didn't list the income on your return and they'll recalculate your taxes and send you a bill. The bill will include penalties and interest for late payment; those will accure from the due date of the return.

They may also tack on an additional penalty for failure to list the income on your return unless you can prove you had a valid reason for failing to list it. "I forgot" isn't a valid reason, by the way.

Answer 2

if they find out, and i'm sure they do. its just a question of what they will do about it. i'd say they would just make u pay the amount whatever your bracket is, and then add a few fees. late, penalty, insubmission, etc.

but i'm assuming you did make the minimum reportable income and not just the cd, right? if u below then u don't even have to do a return.

if this is just your only non-taxed form of income, meaning your other income is automatically taxed and this isn't.... and u made 900. i'd suggest transfering the cd into a trust account, with the benefactor as your roth ira account. then the earnings go directly into your roth tax free forever till 70.5 years old.....

most cpa's don't know this. i buy and sell houses and hold the title in trusts and attached to my retirement accounts and am able to put 40 thousand dollars or more in tax free no capital gains ever if i wait till 70.5.

Answer 3

If that's your only income, you don't have to file.

If you have enough other income to file, or if you file a return and don't list this, then you'll get a letter from the IRS assessing tax if any is due. The amount was reported to them.

Answer 4

do you realy want to be audit for only $900.00?
your bank will reported. don't risk any little thing is not worth it .