What is the tax on a cd?

Answer by  timeismoney (994)

You are taxed on the interest you receive for certificates of deposit which is considered personal income. The tax rate will be whatever tax rate your total income level places you into.

Answer by  tracker76 (135)

I assume you are referring to a certificate of deposit. Your bank will send you a 1099-INT form detailing the amount of interest income you earned on your CD, which is taxable income for income tax purposes. Income from interest is not taxed like capital gains, but is taxed like income at whatever rate you pay for your income bracket.

Answer by  Chaneygirl (1755)

You will need to pay tax on the interest earnings of the CD. This should be when the CD matures and you receive a form 1099-INT from the financial institution.

Answer by  OU (135)

The interest on a certificate of deposit is included in the taxpayer's taxable income. There is no special tax on a certificate of deposit. The total amount of tax is based on the adjusted gross income ( including the cd interest ) less the applicable deductions. The percentage depends on every individual tax return.