[Boomer]

Part II: This is an additional question from me for this thread started a while back:

I am still buying short term, brokered CDs, along with a little bit of additional dividend stocks and some money market. (Yes. I know. I am a boring investor. Welcome to my snoozerama investment philosophy.)

Anyway……..I think I asked this additional question somewhere, someplace on TOTV in the past few months, but now I cannot find that thread……and I am just fine with saying I still don’t get it and asking again……..

So — can somebody please explain to me how interest on a brokered CD becomes taxable at the end of the calendar year in which it is bought, even though the interest income does not get paid until a lump sum at the very end, no compounding along the way.

So far, the CDs I am buying will pay off in 2023. But if I go longer term and all the interest is paid next year, why is that interest taxed before it actually appears in the account?

I am new to brokered CDs and, at first, thought I might have found a way to defer a little income or amount of the RMD until next year by going out longer term. But then I found out it does not work like that. I kept hoping I am wrong. Guess not. (sigh)

Here we are almost half way through 2023, so this question is back on my radar because very soon, 6 month+ CDs will throw interest into 2024 but that interest will still be taxable in 2023. Why?

(Well, I am obviously a woman who is quite secure in admitting that I know what I don’t know and not being the least bit embarrassed about asking questions. I cannot make this timing of taxable interest income thing make sense. Please, somebody explain it — or better yet, tell me where I am wrong in my understanding of how it works.)

Boomer