Let's say, I have $100 in my account today and deposit $50,000 tomorrow. Will I have to account for the lump sum I deposited and pay taxes on it or do I only pay taxes on the interest accrued on the account?
2007-04-08 13:43:22 · 4 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
You only report and pay taxes on the interest that you receive.
2007-04-08 14:07:24 · answer #1 · answered by Judy 7 · 0⤊ 0⤋
Depends on where the $50,000 is coming from. Is it the proceeds of a loan, a cashier's check from a company, distribution from a retirement account, or some other traceable form? If it is cash, then there will be a lot of questions and some forms to complete.
As for the tax issue, it again depends on where the money is coming from. Loan proceeds are not taxable. Payments from companies, retirement account distributions, gifts (over $12,000) from friends/family, etc are all taxable and you will need to report it on your income tax return.
Best bet to get the exact answer for your situation is to consult a good tax accountant.
2007-04-08 20:50:59 · answer #2 · answered by troythom 4 · 0⤊ 2⤋
You just pay tax on the interest. However, the IRS knows how much interest was paid and it's not rocket science figuring out how much money is there from that -- basic algebra 101. If you're not claiming similar income, they may come asking about it.
2007-04-08 20:49:09 · answer #3 · answered by Bostonian In MO 7 · 1⤊ 0⤋
You only pay taxes on the interest, not on the deposit. You itemize the interest on schedule C, and then add it into the total income on page 1 of 1040. Best wishes
2007-04-08 20:49:36 · answer #4 · answered by tylernmi 4 · 0⤊ 2⤋