Finance question: capital gains tax on CD

[PingSpike]

If I had a CD that matured every 9 months, and was automatically renewed...and say I held it for a total of 18 months (matured twice) would it be taxed at the short term capital gains rate or the long term? What about if was held for more then 5 years?

What about a high yield savings account?

 

[kranky]

AFAIK, there's no capital gains or losses with CDs regardless of the term. The gain is treated as interest, just like interest from a savings account.

 

[PingSpike]

Originally posted by: kranky
AFAIK, there's no capital gains or losses with CDs regardless of the term. The gain is treated as interest, just like interest from a savings account.

Is the interest earned then taxed as 'regular income' then?

 

[kranky]

Yes.

 

[PingSpike]

Thanks....and "Noooooooo!"

 

[thumper01]

Originally posted by: PingSpike
If I had a CD that matured every 9 months, and was automatically renewed...and say I held it for a total of 18 months (matured twice) would it be taxed at the short term capital gains rate or the long term? What about if was held for more then 5 years?

What about a high yield savings account?

Kranky is right, CD's don't generate capital gains. Any earnings would be reported to you and the IRS by the bank/issuer as interest on a 1099-INT.

A high yeild savings account would not have any capital gains unless it was some sort of money market account. If it were a MMA, then there is a possibility there could be capital gains/losses (likely short term).

 

[jupiter57]

Let's do the math shall we:
What, a $5000 CD. 4.5- 5% interest rate. The difference in "short term" or "long term" you were inquiring about, would amount to less than $.18 tax in the difference, (should it even exist).
Was that really worth nearly 2 hours of your life you spent posting about it in ATOT?

 

[PingSpike]

Originally posted by: jupiter57
Let's do the math shall we:
What, a $5000 CD. 4.5- 5% interest rate. The difference in "short term" or "long term" you were inquiring about, would amount to less than $.18 tax in the difference, (should it even exist).
Was that really worth nearly 2 hours of your life you spent posting about it in ATOT?

Are you some sort of mythical super douchebag? A special douchebag who is the end result of a secret, government funded selective breeding program designed to enhance the douchebag traits to super human levels? I am frankly shocked...shocked and amazed at what our government is capable of.

PS: I do not recall spending 2 hours reading this exceedingly long thread, but I won't claim to have tracked it on a time sheet either!

 

[dartworth]

mythical super douchebag...


LOL

 

[bsobel]

Originally posted by: jupiter57
Let's do the math shall we:
What, a $5000 CD. 4.5- 5% interest rate. The difference in "short term" or "long term" you were inquiring about, would amount to less than $.18 tax in the difference, (should it even exist).
Was that really worth nearly 2 hours of your life you spent posting about it in ATOT?

Hey Jupiter. Nice thread crap. Followed by bad math, in my case the example you gave my tax difference would be $50, not .18c (albeit, if this was indeed a long/short cap gain issue). So try not to post if you don't understand the material, mkay?

 

[jupiter57]

:laugh:

 

[bsobel]

Originally posted by: jupiter57
:laugh:

5000 at 5% interest per year = $250 per year interest income

$250 taxed at long term rate 15% = $37.50
$250 taxed at short term rate 35% = $87.50
$87.50 - $37.50 = $50

 

[jupiter57]

Originally posted by: bsobel
<div class="FTQUOTE"><begin quote>Originally posted by: jupiter57
:laugh:</end quote></div>

5000 at 5% interest per year = $250 per year interest income

$250 taxed at long term rate 15% = $37.50
$250 taxed at short term rate 35% = $87.50
$87.50 - $37.50 = $50

Those of us who actually work, earn interest, and pay taxes like to use what we call "Deductions".
Look it up, basically, it is money you deduct directly from what you earn, before you pay any taxes.
:roll:

 

[bsobel]

Originally posted by: jupiter57
<div class="FTQUOTE"><begin quote>Originally posted by: bsobel
<div class="FTQUOTE"><begin quote>Originally posted by: jupiter57
:laugh:</end quote></div>

5000 at 5% interest per year = $250 per year interest income

$250 taxed at long term rate 15% = $37.50
$250 taxed at short term rate 35% = $87.50
$87.50 - $37.50 = $50</end quote></div>

Those of us who actually work, earn interest, and pay taxes like to use what we call "Deductions".
Look it up, basically, it is money you deduct directly from what you earn, before you pay any taxes.
:roll:

Strange, I actually do work (more so than you I suspect based on your basic misunderstanding of tax matters). Yea, and those deductions are capped and much of my income earnings are as such taxed as straightline 35% giving me a 33% averaged federal tax debt. So, again, how about not commenting unless you know what your talking about?

Or, better yet, show us how you came up with 18c!

 

[ttown]

Interest income will be taxed as current income as several others have already posted

You'll be taxed on the accrued interest of your renewed CD that hasn't matured, too.
So, supposing you started a 9mo CD on Jan 1 -- you'll pay tax on the interest earned that you realize in 9mo's; and you'll also be taxed on 3mo's worth of the 9mo CD you renewed into.

It'll all be reported to you by your bank on a 1099-int form.

edit: Same deal with a savings account. Savings and CD's accrue _interest_ -- they don't experience capital gains.

 

[Dacalo]

As others have mentioned, CD interest income is ordinary, not a capital income.

LOL @ mythical super douchebag!

 

[sdifox]

I rated this thread 5 stars because of Mythical Super Douchebag!

 

[jupiter57]

Mythical Super Douchebag says:
Arguing over the Internet is like being in the Special Olympics: Even if you win, you're still retarded.


MSD, Over and Out!

 

[jupiter57]

I just can't resist!
Any more Burger King employees out there wanting to cash in your 401K and invest it wondering what benefits/consequences it may have?

 

[alrocky]

Whoa! Burger King has 401(k)s?! How much is the match?

 

[thumper01]

Originally posted by: sdifox
I rated this thread 5 stars because of Mythical Super Douchebag!

2nd that! Too funny.