Cd Taxable Interest
March 15th, 2010If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!
Question: What should I do with my money? I am a college student?
I have recently put nearly $8,000 into a CD collecting 4.3% APY. I hear that this was a pretty good deal.
I have an additional $1,000 that I could put in another CD collecting the same interest.
But I am not sure if I should or not. See, last year I worked at another college part time and in total, I received less than $1,000. (I transferred to another college).
The problem is, I think this previous school did not take out taxes before they paid me. So I don't know if I will have to apy into the system or what will actually happen.
Could an educational institution give out checks to employees and then later have the federal government payment for these taxable wages?
Even as a college student, it is not necessary for me to access this money because I will be joining the Air Force in 2 months and then I will not have to pay for my educational benefits.
Answer: Whether the school took the taxes or not, you are responsible for paying them. If you have earned income, then you must file income taxes and pay whatever the shortfall is from what they've taken out, and what you are responsible for paying.
The federal government is not going to go back to your school for the taxes, they are going to come after you.
File your federal and state taxes in April and you won't have any problems.
So - don't put the $1000 in a CD - keep it in a money market account.
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