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michaelsullivan3335
Level 1

cash out two cd"s

I HAD TWO CD"S WITH jONES.  I TOOK CASH OUT ON ONE OF THEM AND REINVESTED THE OTHER 10.0 WITH CHASE .  DO I PAY ANY TAXES ON THE ONE CD THAT I TOOK 10.0 FOR CASH?

1 Best answer

Accepted Solutions
HelenC12
Expert Alumni

cash out two cd"s

If these CD's are not retirement income, you would only pay taxes on the interest income earned on both CD's. You would not pay income taxes on the principal money you took out or re-invested.

 

If these are retirement CD's and:

  1. You rolled over one of the CD's. Qualifying rollovers might not be taxed, but you still have to report them on your return.
  2. You cashed out one of the CD's, that may be taxable to you. 

There are several different retirement plans, each with their own rules on taxing withdrawn income.

  • On plans like Traditional IRAs and employer pensions, income tax was deferred when you contributed, which means that you’ll now pay tax on the distributions.
  • With plans like Roth IRAs, however, income was already taxed during contribution, and so isn’t taxed now.
  • Just enter your 1099-R as it appears and answer a few questions—we’ll figure out what, if anything, will be taxed.
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1 Reply
HelenC12
Expert Alumni

cash out two cd"s

If these CD's are not retirement income, you would only pay taxes on the interest income earned on both CD's. You would not pay income taxes on the principal money you took out or re-invested.

 

If these are retirement CD's and:

  1. You rolled over one of the CD's. Qualifying rollovers might not be taxed, but you still have to report them on your return.
  2. You cashed out one of the CD's, that may be taxable to you. 

There are several different retirement plans, each with their own rules on taxing withdrawn income.

  • On plans like Traditional IRAs and employer pensions, income tax was deferred when you contributed, which means that you’ll now pay tax on the distributions.
  • With plans like Roth IRAs, however, income was already taxed during contribution, and so isn’t taxed now.
  • Just enter your 1099-R as it appears and answer a few questions—we’ll figure out what, if anything, will be taxed.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

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