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Old 10-15-2006, 09:43 AM
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Default Should I need to pay tax for interest from Money Market Accounts?

Sorry, if the post seems stupid...
I'm 24yr old and just started savings....

I heard some where that I need to pay taxes for the intersest earned too. Is that the case for the interest earned from money market accounts like ING ED too?
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Old 10-15-2006, 09:48 AM
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Default Re: Should I need to pay tax for interest from Money Market Accounts?

Yes, you have to pay income tax on any interest that you earn. Your bank will send you a form at the end of the year! It is called a 1099 form, I think!
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Old 10-15-2006, 11:31 AM
Mathew Green Mathew Green is offline
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Default Re: Should I need to pay tax for interest from Money Market Accounts?

Quote:
Originally Posted by Ima saver
Yes, you have to pay income tax on any interest that you earn. Your bank will send you a form at the end of the year! It is called a 1099 form, I think!
Definitive Answer:
http://www.irs.gov/taxtopics/tc403.html

(Subject to change, as all tax laws always are)
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Old 10-15-2006, 03:12 PM
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Default Re: Should I need to pay tax for interest from Money Market Accounts?

thanks a lot for the info!....

love this forum!
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Old 10-15-2006, 11:04 PM
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Default Re: Should I need to pay tax for interest from Money Market Accounts?

Doesn't the interest earned have to be at least $10 before you are issued a 1099? Or is it $10 minimum before you have to pay taxes?
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Old 10-16-2006, 05:42 AM
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Default Re: Should I need to pay tax for interest from Money Market Accounts?

Quote:
Originally Posted by greedy4chips
Doesn't the interest earned have to be at least $10 before you are issued a 1099? Or is it $10 minimum before you have to pay taxes?
You have to report and pay taxes on ANY interest but the company doesn't have to issue a 1099 unless the amount is $10 or more. Same for stock dividends.

The only exceptions I can think of are if your account is a retirement account or if the money market account is tax-free.
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Old 10-16-2006, 09:35 AM
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Default Re: Should I need to pay tax for interest from Money Market Accounts?

What is Backup withholding.
I have signed up for an ING Direct account and it I haven't checked that option. coz it says If i checked that option, ING would send 28% of interest direct to IRS.
So, haven't checked. Is it anything I need to worry about?
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Old 10-16-2006, 09:41 AM
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Default Re: Should I need to pay tax for interest from Money Market Accounts?

Backup withholding is ordered by the IRS when something is not right with your tax status -- for example if you were caught not claiming interest income in the past. If you've never heard of it, then it's nothing to worry about and you should not check the box.
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