Do I have to pay taxes on a CD if the money invested is from a personal injury settlement?
I recently recieved my settlement for a job related injury and would like to invest my money in a CD. Would i have to pay taxes on the interest earned on this investment?
Asked By: Felipe G - 5/2/2007
Best Answer - Chosen by Asker
It doesn't matter where the money comes from; if you invest it and earn interest the interest is taxable. Here is a suggestion however; visit with a stockbroker and put the money into TAX EXEMPT instruments. A state bond pays interest that is not taxable by the IRS and also not taxable by the state that issues it... More
Answered By: acmeraven - 5/2/2007
Additional Answers (9)
Answered By: Chaney Lake Girl - 5/2/2007
Yes, that instrument is a taxable income source.
Answered By: KirksWorld - 5/2/2007
Yes, the interest is taxable no matter where the investment money came from.
Answered By: Brian G - 5/2/2007
Of course...regardless of where the funds come from, if you're earning interest, you pay taxes.
Answered By: Todd S - 5/2/2007
Yes, you always have to pay taxes on interest.
Answered By: Lore - 5/2/2007
yes,, you'll get a 1099INT from the bank, you'll need to report that amount on your tax return
Answered By: Jo Blo - 5/2/2007
Yes. Although the award may be tax-free, any interest or dividends your earn by depositing or investing it is fully taxable.
Answered By: bostonianinmo - 5/2/2007
You'd pay tax on the gain from any investment that you make with the money, including interest on a CD. Only the initial principal amount comes to you without being taxed.
Answered By: Judy - 5/2/2007
Yes. It doesn't matter where the money came from. You always pay tax on the interest if it is enough to have to claim.
Answered By: Deb S - 5/3/2007
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