When is interest on a CD reported to the IRS?

Forum|Forum|3 years ago
March 13, 2023
3 replies
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If you own a CD now that matures in 2024 or in a later year, will you receive a 1099-INT in early 2024 for interest earned in 2023 even though you haven't withdrawn the interest and the CD hasn't matured?

Thank you!

TurboTax Home & Biz Windows

Best answer by SteamTrain

You probably have to ask your provider what they do.

My CDs at Ally always report accrued interest at year end on a 1099-INT for that year, no matter how long the CD is for. So if a 1 yr CD is purchased 3mos before year end, those 3mos of interest are reported for that year....and then the next 9mos will be included for the next year's 1099-INT.

_____

But like I said...I know some CDs only reported at maturity.

Bsch4477

Employee

The interest is reported in the year it is paid.

LindaS5247

Yes. You would report the interest to the IRS when it is earned, and reported to you.

According to the IRS, if the interest earned during the tax year exceeds $10, you must report it on your tax return and pay taxes on it. 1 This reduces your return on the investment, so it's important to consider how CD interest is taxed in order to decide if placing your money in a CD is worth it.

Click here for detailed information on Form 1099-INT.

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Frank nKansasAuthor

So is there a difference between the time the interest is earned and when it is paid?

Maybe the question is: When you have a CD that matures in 12 months, is interest actually earned prior to the end of the 12 month period? Maybe interest is neither earned nor paid until the CD matures. Then on the date of maturity, interest is earned and paid and in addition, the CD could be rolled over for a new 12 month period (?)

Thank you helping me understand this!