I have several CDs in a foreign institution in Spain. They all started in January 2024 and they all spanned into 2025 (January 2025 and July 2025). Most of the CDs had a maturity of 12 months, but a couple of them have a maturity of 18 months. They all only pay the interests at their maturity. I have checked with the bank and said I will not receive the equivalent of a 1099-INT until next year because in the eyes of the Spanish legislation that income belongs to the 2025 fiscal year.
When do I need to report that money here in the US? Is there a difference if the CD is 12 months or 18 months?
Reading Pub 550, on page 7 it says:
Certificates of deposit and other deferred interest accounts.
If you buy a certificate of deposit or open a deferred interest account, interest may be paid at fixed intervals of 1 year or less during the term of the account. You generally must include this interest in your income when you actually receive it or are entitled to receive it without paying a substantial penalty. The same is true for accounts that mature in 1 year or less and pay interest in a single payment at maturity. If interest is deferred for more than 1 year, see Original Issue Discount (OID), later.
My interpretation is, for the CDs that last 12 months and pay interests at maturity, then I will report them in 2026. However, notice that last sentence underlined. When looking farther down in Pub 550, on page 20 it says:
Certificates of Deposit (CDs)
A CD is a debt instrument.
If you buy a CD with a maturity of more than 1 year, you must include in income each year a part of the total interest due and report it in the same manner as other OID.
The way I interpret that info on pg 20 is that I should report interest accrued, even if it has not been paid.
That is what really confuses me.
How do you interpret that part? Again, I will only receive the interest at maturity and will not receive any equivalent of a 1099 INT until next year.
Thank you
