Do you pay ordinary income tax or capital gains tax on gains from cds and bonds?

Answer 1

depends on the cds and/or bonds. If it's a normal cd and you just wait until it matures then it's interest income which is taxed as ordinary income. If it's a brokered cd, and you sell it at either a gain or a loss then that would be capital gains. For bonds, the interest you get from them is ordinary income, and if you sell the bond for a gain or a loss that is capital gains.

Answer 2

It depends on the type of "gains."

Interest earned on a bond or cd is taxed at ordinary income tax rates.

If you sell a bond for more than you paid for it, the difference which is not interest is a capital gain. If you have held the bond for more than a year, the gain is taxed as a long-term capital gain (maximum tax is 15%). If you have held the bond for one year or less, the gain is ordinary income.

Answer 3

You pay ordinary income tax on the interest. If you sell a bond at a profit, it's capital gains.

Answer 4

Assuming these are not munis- The sale of a bond results in a gain/loss which will be taxed at ordinary income tax rates if you held the property for less than one year (short term) and at preferred capital gain rates if your holding period is greater than 1 year (long term). For this sale you will receive a 1099-B that will be reported on schedule D of your income tax return.

CDs and US savings bonds mature, you usually don't sell these, you just cash them in. On any "gain", the cash value greater than your initial cost is interest, earned, you will receive a 1099-Int for, that will be reported on schedule b of your income tax return.

Answer 5

It depends on how long you have owned them.