What are the tax consequences on an 11 month old CD?

Answer by  Kurt (4579)

The income from a CD is based on when the CD matures and the interest is paid to the holder of the CD. If the CD is eleven months old but no interest has been paid, there is NO tax consequence. But when the CD does pay, the holder will receive a 1099 form from the bank.

Answer by  Att4372 (1704)

Most CDs post interest monthly, on the anniversary date of the purchase. Income is earned after each posting. Tax is due for the year in which the interest is posted. You buy a CD on January 20. Interest is posted on the 20th of each month. This year you received 11 payments and pay tax by April 15 next year.

Answer by  TOM10309 (149)

Interest earnings on a CD are not paid as they accrue. Instead, they are taxed in the calendar year of the date of maturity if held to maturity. If CD is cashed out early, there will be a penalty on the interest earned. This penalty is deductible on your taxes.

Answer by  BrianSJ (524)

Interest on a CD is taxable for the year in which it is earned, so you will owe income taxes on interest earned in those 11 months.

Answer by  Kdm (180)

The interest earned on the CD is taxable. If it is an early withdraw, the bank will have a penalty, the penalty is a front page deduction.