| daniel200 |
03-30-2023 11:42 AM |
Quote:
Originally Posted by keepsake
(Post 2202679)
Even if your CD cannot be touched for lets say two years, you are taxed on the interest income, yearly. Go figure damn IRS. You are told you have to pay a penalty for early withdrawl. So how do you get the damn money to pay the interest tax ?
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There is an easy way to delay the taxes
Buy a US Treasury on the secondary market (Fidelity, Vanguard etc) with a very low interest rate. You can find zero interest or low interest (say 0.25% or 0.5%)
Because of the low interest you can buy these at a discount that brings the yield to maturity equal to recently issued treasury bonds. Just make sure the maturity date is longer than 12 months from the date you purchase.
The interest is taxed yearly (but your interest is minimal).
At bond maturity, you have a long term capital gain that is taxed at long term capital gain rates.
So if you buy a two year zero coupon (0% interest) … you pay no yearly tax on interest because no interest was paid. At the end of two years you are taxed on a long term gain (currently about 8% = 2 years x 4% / year).
Currently for a married couple, their first $83,000 in long term gains are taxed at zero! So no tax on the long term gain if your total long term gains is less than $83,000 |
