Sydney Garth, Credit Cards Moderator
@sydneygarth
You report CDs to the IRS by including the interest you earned, not the CD balance itself, on your federal tax return. Banks and credit unions send you a Form 1099‑INT if you earned at least $10 in interest, and you must report that interest as ordinary income for the year it was earned.
How To Report CD Interest on Your Federal Return
- Collect documents: Gather all 1099‑INTs from each bank or broker that paid you $10 or more in interest. If you didn’t get a 1099, use your bank statement or year‑end statement to total interest.
- Complete forms: Enter total interest on Form 1040 on the line labeled “Interest”.
- Complete Schedule B (Form 1040): If your total taxable interest and ordinary dividends exceed $1,500, or if you have certain foreign accounts or nominee interest, you must also complete and attach Schedule B to your return. List the payers and amounts there, then carry the total to Form 1040.
- Keep records: Save 1099‑INTs, bank statements, and any calculations showing how you determined interest amounts for at least 3 years or longer if you have special circumstances.
Keep in mind that CD interest is taxed as ordinary income at your regular federal income tax rate, not as capital gains. Also, if your CDs are held in a tax‑advantaged account, such as an IRA or 401(k), the interest is generally not taxed until withdrawal.
For assistance and the most up-to-date information, visit the IRS website or reach them by phone at (800) 829-1040.
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