ira cd taxable
I’m looking for a real IRA tax expert. My daughter is also looking for one to set up her IRA.
I have an IRA CD with a March maturity and to attempt to conform with IRS regulations pertaining to the showing of FMV on 12-31 they show an accrued interest on the year end report of 9000 which they report to the irs and which becomes part of the FMV. I then have to include this for my total FMV and then I have to pay a larger tax on my distribution than I would normally do. Then the next year they post the normal interest on March of 12,000 which they add to my FMV. So I have to pay tax on the 12,000 but, I already paid tax on the first 9000. So that means that I have to pay tax twice on that 9000.
Therefore I need a knowledgeable person to possibly has come up against this sort of thing.
Permalink Submitted by Alan Spross on Sat, 2008-08-09 23:30
You are not analyzing this correctly.
You are only paying a tax when you take a distribution, in this case your RMD. There is no current tax on the $12,000 interest posting in March.
However, the inclusion of the $9,000 accrued interest on Form 5498 does increase your RMD requirement somewhat. Each year your balance is 9,000 higher than it otherwise would be without the accrued interest amount in the year end FMV. So you are paying taxes sooner, but you are not paying double taxes.
What is the exact term of this CD, and is your IRA custodian the issuing bank or is your IRA with a broker?