What Is Taxable Interest Income?
Taxable interest income is taxable income a person receives in the form of interest. Interest is an amount of money a person earns on an investment or financial instrument. For example, a person who has a savings account, certificate of deposit, money market account, or other type of financial instrument may earn interest. While there are some types of interest income that are not subject to taxes, interest from these types of accounts is usually taxable. When a person holds an interest-bearing account such as a savings account, he essentially deposits money into the account and allows a financial institution to make use of it until he is ready to remove it from his account. In exchange for using this money, financial institutions provide interest income. Some people may consider this free money and expect it to be separate from other income on which they must pay taxes. That is not the case, however, and when the time comes to pay taxes on income, each taxpayer is usually required to
