taxes on interest from savings account?

[rainws]

do you get taxed on interest earned from a regular savings account?

[noppenbd]

Yes, at your marginal rate.

[poundwise]

Yep.

Stinks, doesn't it?

Your financial institution should provide you with a 1099-INT form for tax purposes.

[disneysteve]

Your financial institution should provide you with a 1099-INT form for tax purposes.

Unless you earn less than a certain amount - I think it is $10.00. You still need to report that on your taxes but you may not get a 1099.

[poundwise]

Unless you earn less than a certain amount - I think it is $10.00. You still need to report that on your taxes but you may not get a 1099.

True.

[Seeker]

do you get taxed on interest earned from a regular savings account?

Yes, technically you do get taxed.... but the real question is are you earning enough interest to make a difference? With the lower interest rates of "regular savings accounts," you probably aren't going to notice a real difference.

You need to look at the tax tables are where the interest earned places you. Then look at the tables where you would have been without that interest earned.

The differences (the taxable amounts) will not be more than your earned interest; and there may even be zero difference if you've not crossed a border of tax table ranges.

[safari]

Yes, technically you do get taxed.... but the real question is are you earning enough interest to make a difference? With the lower interest rates of "regular savings accounts," you probably aren't going to notice a real difference.

You need to look at the tax tables are where the interest earned places you. Then look at the tables where you would have been without that interest earned.

The differences (the taxable amounts) will not be more than your earned interest; and there may even be zero difference if you've not crossed a border of tax table ranges.

I believe the tax table ranges change in $50 increments, so potentially $1 in earned interest may cost you $7-14 extra in tax, depending on your tax bracket, if it pushes you into the next income range. I wouldn't worry about it though because in 99.9% cases it's better to earn interest than not.

[disneysteve]

in 99.9% cases it's better to earn interest than not.

This applies to income in general. When I was a resident, I used to moonlight a lot, working part-time in doctors' offices. I would make $40-$50/hour (and this was back in 1992-3). Some of my fellow residents said they didn't think moonlighting was worth the hassle because the extra income would put them in a higher tax bracket. Huh? You don't want to earn a lot more money because you'll have to pay more taxes? Made no sense at all. It isn't like taxes take a significant amount of the income. You still get to keep most of it. Same goes for the savings accounts. Better to earn the interest and pay the taxes than to not earn the interest.

[rainws]

thanks guys, makes sense. so i guess there are very few ways to invest without being taxed (roth ira)