When is CD interest taxed?

Question

I invested in certificates of deposit for the first time in 2023, so I'm trying to figure out how CD interest is taxed.

This article[1] indicates that interest on short term CDs (less than 1 year) is only taxed in the year that the CD matures. This would mean that none of the interest on an 11-month CD that matures in January of

2024 is taxable in 2023; it will all be taxed in 2024, even though most of it was actually earned in 2023.

Is this correct? If so, is this rule written down anywhere? (My searches for anything official on this topic have come up empty thus far.)

[1]

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John Levine · Accepted Answer

According to Ian Pilcher     IRS Publicati  In general, any interest that you receive or that is credited to your  account and can be withdrawn is taxable income. and  Certificates of deposit and other deferred interest accounts. If you  buy a certificate of deposit or open a deferred interest account,  interest may be paid at fixed intervals of 1 year or less during the  term of the account. You generally must include this interest in your  income when you actually receive it or are entitled to receive it  without paying a substantial penalty. The same is true for accounts  that mature in 1 year or less and pay interest in a single payment at  maturity. If interest is deferred for more than 1 year, see Original  Issue Discount (OID), later.So yes, you pay tax when the CD matures.  Your bank or broker should sendyou a 1099-INT saying how much.

When is CD interest taxed?

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