I recently recieved my settlement for a job related injury and would like to invest my money in a CD. Would i have to pay taxes on the interest earned on this investment?
2007-05-02 10:22:12 · 10 answers · asked by Felipe G 1 in Business & Finance ➔ Taxes ➔ United States
It doesn't matter where the money comes from; if you invest it and earn interest the interest is taxable. Here is a suggestion however; visit with a stockbroker and put the money into TAX EXEMPT instruments. A state bond pays interest that is not taxable by the IRS and also not taxable by the state that issues it. Example; in Montana a Board of Housing Bond is taxed by neither fed nor state and rate of interest is higher than a CD. They are usually tripple A rated and insured so civilization would collapse before anything is placed at risk.
2007-05-02 12:05:24 · answer #1 · answered by acmeraven 7 · 1⤊ 2⤋
You'd pay tax on the gain from any investment that you make with the money, including interest on a CD. Only the initial principal amount comes to you without being taxed.
2007-05-02 19:30:57 · answer #2 · answered by Judy 7 · 0⤊ 0⤋
Yes. It doesn't matter where the money came from. You always pay tax on the interest if it is enough to have to claim.
2007-05-03 14:32:10 · answer #3 · answered by Deb S 6 · 0⤊ 0⤋
Yes
2007-05-02 17:25:50 · answer #4 · answered by Chaney Lake Girl 2 · 2⤊ 0⤋
Yes. Although the award may be tax-free, any interest or dividends your earn by depositing or investing it is fully taxable.
2007-05-02 18:39:11 · answer #5 · answered by Bostonian In MO 7 · 1⤊ 1⤋
Yes, the interest is taxable no matter where the investment money came from.
2007-05-02 17:28:34 · answer #6 · answered by Brian G 6 · 1⤊ 1⤋
Yes, you always have to pay taxes on interest.
2007-05-02 17:30:14 · answer #7 · answered by Helen Scott 7 · 1⤊ 1⤋
Of course...regardless of where the funds come from, if you're earning interest, you pay taxes.
2007-05-02 17:29:02 · answer #8 · answered by Todd S 3 · 1⤊ 1⤋
Yes, that instrument is a taxable income source.
2007-05-02 17:27:25 · answer #9 · answered by KirksWorld 5 · 1⤊ 1⤋
yes,,
you'll get a 1099INT from the bank, you'll need to report that amount on your tax return
2007-05-02 17:42:39 · answer #10 · answered by Jo Blo 6 · 2⤊ 1⤋