If you have money sitting in a savings account earning interest, do you have to pay quarterly estimated taxes?

Question

If not, can a person collect interest on their money all year long and just pay taxes on the interest at the beginning of the following year? Does it matter the amount? What if a person has ten million dollars sitting in an account earning interest?

Answer 1

If you expect to have a tax liability over $1,000 that is not covered by withholding, then you are supposed to pay estimated taxes.

If you earn enough interest to owe $1,000 in taxes on the interest, you should send in estimated tax payments.

Answer 2

If you have enough to leave 10 million in a savings account then you know you need to pay quarterly. If it is just a piddly amount like 1 or 2 thousand, then unless you have a lot of other taxes that need to be paid quarterly, the IRS will probably not go after you if you pay annually. Just be sure to declare the interest and pay.

Answer 3

You only pay tax on the income, that is the interest element. The capital they generously let you keep. Most savings accounts automatically deduct the interest so you don't need to pay any more. If you are not a tax payer you can apply to have the interest paid gross. It should show on your statement of interest if they have deducted the tax.

Answer 4

It depends on how much interest you're getting. If you had $10,000,000 in your account, then yes you should.

At tax time, if you don't have most of your taxes already paid, you can be penalized for under-withholding.

Answer 5

If your total tax liability is expected to exceed $1,000, you must make quarterly estimated payments.

Answer 6

no, but you do have to pay income tax on iit-you will get a 1099 form for the irs

Answer 7

no, only at the end of the year it's not road tax.

Answer 8

ask this in business & finance (taxes)