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Does money from a maturing CD count as 'gross income'?

I sold off a bond ETF, and this entire investment (including original principal) was counted in my adjusted gross income. I wasn't expecting this. Now this has greatly lowered my Covered California health care benefits for the year.  I had estimated that my income would be much lower. This had me wondering if money from a maturing CD counts as adjusted gross income.

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3 Replies
LindaS5247
Employee Tax Expert

Does money from a maturing CD count as 'gross income'?

Your ETF would be taxed as a capital gain.  How long you held your bond for would determine if it was a short-term or long-term capital gain.

 

In general;

 

If you sell after less than a year, your ETF will be taxed as a short-term capital gain. Short-term capital gains have a significantly higher tax rate than long-term capital gains.

 

If you hold on to your ETF for more than a year, it is taxed as a long-term capital gain.

 

Capital gains and losses are found on Schedule'D of your tax return.

 

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Click here for additional information on taxes on investments.

 

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Does money from a maturing CD count as 'gross income'?

I'm saying that I sold off a bond ETF after making a small capital gain. But, the ENTIRE proceeds of the sale, including original principle ALL counted as 'adjustable gross income'. This greatly reduced my Covered California health care benefits. I would have been better off just keeping this money in cash the whole time. This had me wondering if a maturing CD would be treated differently. Would JUST the interest count as 'adjustable gross income' or would the entire amount of original principal ALSO count as 'adjustable gross income'?

DavidD66
Employee Tax Expert

Does money from a maturing CD count as 'gross income'?

The proceeds of selling a bond ETF (or any other stock, bond, or ETF) would only result in the entire proceeds being reported as income if the cost basis was not reported.  If you follow LindaS5247's instructions on how to report your investment sale it will result in only your gain being included in income.  If you imported the transaction from your broker, try deleting it and enter it manually.    

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