Is interest on a CD realized (for tax purposes) when it matures or when it is cashed?

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Is interest on a CD realized (for tax purposes) when it matures or when it is cashed?

2007-12-30 04:21:04 · 2 answers · asked by Anne S 1 in Business & Finance ➔ Taxes ➔ Other - Taxes

2 answers

When it matures, if it's for 1 year or less. Otherwise, the interest must be claimed annually - you should get a 1099-int from the entity holding the CD.

2007-12-30 04:31:30 · answer #1 · answered by Judy 7 · 2⤊ 0⤋

If you cash it early, you realize the remaining interest immediately and pay a penalty for early withdrawal (the penalty is deducted separately on the tax return).

If it matures and you fail to cash it:
1 year CD, when it matures.
2 year CD, you will get a 1099-INT for the first year's accrual.

2007-12-30 04:26:34 · answer #2 · answered by Anonymous · 0⤊ 0⤋