When is interest on a CD reported to the IRS?

[fpc]

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2024 or in a later year, will you receive a 1099-INT in early 2024 for interest earned in 2023 even though you haven't withdrawn the interest and the CD hasn't matured?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!

[Bsch4477]

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.
 

[SteamTrain]

It might depend on the CD.

...some used to only report interest at maturity.

...others may report what accrued during the year.

I suspect that most now report what has been accrued every calendar year.

You could always ask the CD provider

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[fpc]

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!

[Bsch4477]

There is a difference between interest being accrued or earned and when it is paid to the holder of the CD. When it’s paid, it’s reported. 

[SteamTrain · Accepted solution]

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.

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

[fpc]

Great!  I'll ask the bank what their policy is for their CDs.

I would have thought that the annual 1099-INT would cover interest accrued - whether paid or not - during the year with no consideration given to maturity date.  I think(??) that once the interest is accrued, it can be withdrawn with no penalty, so available funds would seem to have been earned.  But like you folks are saying, there is no strict policy to follow.

Thank you so much folks for your time to help me with this!