Felipe G asked:
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?
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- In California does a person have to pay taxes on a (physical) personal injury settlement?
- In a personal injury case, are medical lien holders entitled money if the settlement is awarded as pain/suffer
Yes, that instrument is a taxable income source.
Yes, the interest is taxable no matter where the investment money came from.
Of course…regardless of where the funds come from, if you’re earning interest, you pay taxes.
Yes, you always have to pay taxes on interest.
yes,,
you’ll get a 1099INT from the bank, you’ll need to report that amount on your tax return
Yes. Although the award may be tax-free, any interest or dividends your earn by depositing or investing it is fully taxable.
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. Example; in Montana a Board of Housing Bond is taxed by neither fed nor state and rate of interest is higher than a CD. They are usually tripple A rated and insured so civilization would collapse before anything is placed at risk.
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.
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.