I want to know because i am thinking of closing my current bank savings account to open up an internet savings account
2007-06-19 05:27:36 · 13 answers · asked by penguinprez 2 in Business & Finance ➔ Taxes ➔ United States
Is it worth switching my savings account to an online one?
2007-06-19 05:32:31 · update #1
Any interest earned is considered income and is therefore taxable.
2007-06-19 05:31:04 · answer #1 · answered by lunatic 7 · 0⤊ 0⤋
No, that is NOT true! The interest is taxable income to be sure, but you do NOT pay it all back in the form of taxes! It doesn't matter if it's an account at a local bank or an Internet based one, the interest is fully taxable as ordinary income.
2007-06-19 07:23:14 · answer #2 · answered by Bostonian In MO 7 · 1⤊ 0⤋
Interest is interest (unearned income) whether an internet savings account or a mortar and bricks bank savings account. You may avoid paying tax on interest until withdrawn in certain situations such as 401Ks, IRAs of certain types and other tax-deferred vessels. Otherwise, it's reportable and may or may not raise you to a new income bracket when taxes are calculated.
2007-06-19 05:31:57 · answer #3 · answered by saurus3118 5 · 0⤊ 1⤋
You have to pay taxes on interest you earn on a savings account whether it be at a brick and mortar or an online bank.
You'll probably earn more interest online.
2007-06-19 05:34:03 · answer #4 · answered by Ronin 4 · 0⤊ 0⤋
The interest that you earn on a savings account, whether at a brick and mortar bank, or on an internet savings account, must be reported as income.
That does NOT mean you'll have to pay taxes on it. Your tax liability is dependent on many different factors.
In all likelihood, interest income won't change the amount of tax you owe.
In any event, changing from a brick-and-mortar bank to an Internet bank will definitely not change your tax situation.
2007-06-19 05:31:32 · answer #5 · answered by Scotty Doesnt Know 7 · 2⤊ 3⤋
No, you don't pay back the whold amount as taxes. But if you have enough total income to pay taxes, you do pay tax on the interest - percent would be 10% to 35% depending on your bracket.
2007-06-19 07:58:45 · answer #6 · answered by Judy 7 · 2⤊ 0⤋
any income no matter where it is made, has to be added to your total income for income taces, this includes interest earned on bank accounts, internet or non. you don't actually just have to pay the interest back, just include it in your total income.
2007-06-19 05:34:01 · answer #7 · answered by Nick C 3 · 1⤊ 0⤋
Yes, and it will be on an internet savings account as well if it is legitimate.
2007-06-19 05:32:48 · answer #8 · answered by QuarterRoy 2 · 0⤊ 0⤋
It probably is worth it to switch to an online savings account (FDIC-insured, of course).
HSBC and ING Direct offer 5.05% and 4.50% APY, respectively.
2007-06-22 09:38:01 · answer #9 · answered by lintobean 2 · 0⤊ 0⤋
Yes, you have to pay taxes on money you earn as interest.
2007-06-19 05:30:38 · answer #10 · answered by Freethinker 6 · 0⤊ 0⤋