When the rule for being taxed on interest from money market accounts? I know that I must report it.?

Question

Example: I'm single made 50, 000 last year and 3000 dollar of my money market Do I get taxed on the 3000?

Whats the rule sorry:-)

So Im getting taxed twice on the same money? Ok going offshore.

ok thanks all , I understand now.

Answer 1

You only get taxed on the interest you earn from the money in the money market. If you made $50,000 last year for a salary, you were taxed on that, if you had $3,000 in a money market, you're only taxed on the interest that that $3,000 earns.

Answer 2

Not sure just what you are asking. Interest is taxable, so yes, if you made $3000 on your money market fund for the year, you'd report the $3000 as interest and be taxed on it. With $50K other income you'd probably be in the 25% bracket, so your tax on the interest would be $750.

Answer 3

Of course you do.

Interest income is consider ordinary income and taxed the same as your wages.

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No you are not being taxed twice. You are taxed on the interest earned in the account and not the principal. The interest has not been taxed before.

Answer 4

Wayne's statement "Interest income is consider ordinary income and taxed the same as your wages." is wrong:

1. Wages are subject to social security and medicare taxes. Interest income is not.
2. Wages are earned income. Interest is unearned income. The income tax rate is the same, but the "earned income credit" computation is different.

Answer 5

Of course you will be taxed! Dividends and interest are fully taxable. List them on Schedule B.

Addendum: Where do you get the idea that you're being taxed twice?? Going off-shore won't help, the interest is still fully taxable.