Do I need to pay taxes on my Certificate of Deposits (CDs) this year that I just opened up in October?

For CDs opened in October, you'll only pay taxes on the interest actually earned and credited to your account during the calendar year. So for 2024 tax filing (covering 2023 income), you probably won't have anything to report if you just opened them in October 2023. Your bank will send you a Form 1099-INT in January 2025 showing all interest earned during 2024. That interest will be taxable on your 2024 return (filed in 2025). For most CDs, interest is typically credited at maturity for short-term CDs or annually for longer terms. Check your CD agreement to see when interest is credited. Since you're self-employed, this interest income doesn't affect your self-employment tax, but it does add to your overall taxable income. Just be prepared to include that 1099-INT information when you file next year.

I went through the exact same headache with my first CDs last year! After spending hours trying to understand bank statements and tax requirements, I found this AI tool called taxr.ai (https://taxr.ai) that was super helpful for figuring out what counts as taxable interest income. You just upload your bank statements and it highlights all the reportable interest, even telling you which tax year it belongs to. Saved me from making mistakes on my taxes. For CDs specifically, it clarified that I only needed to report interest in the year it was actually credited to my account, not when I opened the CD. Might be worth checking out since you're already dealing with 1099 self-employment stuff which is complicated enough on its own!

Just wanted to follow up about taxr.ai - I decided to try it after my last comment. Definitely worth it for my situation! I had 4 different CDs that matured at different times and was completely confused about what counted for this tax year. The tool analyzed my statements and clearly showed which interest payments needed to be reported this year versus next year. It also found some interest income from a money market account I completely forgot about! Would have missed reporting about $240 in taxable interest. For anyone else dealing with multiple interest-bearing accounts, it seriously helps organize everything for tax time.

If you're having trouble getting clear answers about your CDs and taxes, you might want to try Claimyr (https://claimyr.com) to actually speak with an IRS agent. I was in a similar situation last year with some complicated investment income questions, and after waiting on hold for hours with the IRS with no luck, I found this service. They somehow get you through to an actual IRS representative in minutes instead of hours. There's a quick video showing how it works: https://youtu.be/_kiP6q8DX5c I was able to ask specific questions about my situation and got official answers directly from the IRS about when certain types of interest income should be reported. Especially since you're a 1099 contractor, getting clear guidance straight from the IRS might save you headaches later.

I'm honestly shocked but I have to admit I was completely wrong about Claimyr. After leaving that skeptical comment, I decided to try it since I had some questions about my own investment income. Got connected to an IRS agent in about 20 minutes! The agent walked me through exactly how CD interest reporting works - basically confirmed what others said here about only reporting interest in the year it's actually paid to you. He also explained that banks are required to send 1099-INT forms for any account that earned more than $10 in interest during the year. Having that direct confirmation from the IRS gave me peace of mind. Never thought I'd say this, but it was actually worth it just to get definitive answers rather than stressing about conflicting info online.

One thing nobody mentioned yet - if your CDs are in a retirement account like an IRA, you don't pay taxes on the interest until you withdraw from the retirement account! But from your post it sounds like these are regular CDs, not retirement account CDs.

Tip from someone who's been there: make sure you check if your CD interest is simple or compounded. My bank advertised a great rate but buried in the fine print that it was simple interest, not compound. Makes a difference in how much you actually earn and therefore how much tax you'll pay. Just something to double check!

Thanks everyone for all the helpful info! This thread has been super educational. I had no idea about the timing of when interest gets reported vs when CDs are opened. Sounds like I'm in the clear for my 2024 taxes since I just opened these in October. I'm definitely going to keep an eye out for those 1099-INT forms next January. Since I'm already dealing with 1099 contractor stuff, adding another form to track isn't too bad. At least CD interest seems more straightforward than estimated quarterly payments! One quick follow-up question - do credit unions send the 1099-INT forms at the same time as banks? My credit union is pretty small and sometimes they're slower with paperwork compared to the big banks.