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helpmeout

Saving account u get tax on?

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So as my question implie, do you get taxed on a saved account. I just recently opened a high interest saving thru synchrony and it’s 1.80 however I did some research and it says you can get taxed on that because it’s extra income? How does that work because I just want the most money back. I know I could put into cds and all that but I wanna withdraw it if I need it so those are out of the question and I already have a 401k plan through my work but I want my own savings that I can touch anytime I need to. Navy federal offers a saving account but it’s only .20 interest rate and I won’t get much from that as compare to the 1.80 that synchrony offers

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33 minutes ago, cv91915 said:

Interest received from a savings account or a CD is taxed.

Do you know by how much?

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16 minutes ago, helpmeout said:

Do you know by how much?

It's taxed like ordinary income, like from your salary/wages at work.

 

The rate depends on your income level.

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As noted, rate is dependent upon the individual's situation.  Dividends and interest have their own line on the form. 

 

That being said, most people are NOT making enough on savings account interest for it to matter and some banks won't even send the form unless you crack $600 in interest.  At the 1.80%, you won't be getting rich on the interest, especially with the declines in the past few months even on high-yield accounts.  There are FAR better investment vehicles than a savings account and anyone who had enough IN savings to crack the reporting levels should be fiscally savvy enough to know not to want that level of funds in an account making next to nothing...and yes, sub-two-percent yields ARE next to nothing. 

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I don’t really know what to invest into. I have 1k spare and I’m adding 200 to that saving every month.

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Banks generate 1099 forms (for interest income) if you make at least $10 in interest in one year. Save those. Tax preparing software will prompt you to enter those amounts in your tax return. Simple to do. Interest counts as income, even though what you earn is probably less than the rate of inflation.

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18 hours ago, helpmeout said:

I don’t really know what to invest into. I have 1k spare and I’m adding 200 to that saving every month.

Put it in a high-yield savings account for now.

 

While you aren't going to get rich at 2% APY, having the money immediately available will be a godsend if you encounter unexpected expenses or an income disruption. 

 

Don't worry about chasing higher returns until you have 6-12 months worth of expenses set aside.

 

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1 hour ago, cv91915 said:

Put it in a high-yield savings account for now.

 

While you aren't going to get rich at 2% APY, having the money immediately available will be a godsend if you encounter unexpected expenses or an income disruption. 

 

Don't worry about chasing higher returns until you have 6-12 months worth of expenses set aside.

 

Yeah I do need to save more but i did use their calculator and they said I could have bout 2.1k back with my 1k of course within 6 months at 100 each month. Just trying to save up more money now since I paid of my car in August.

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If you're on a high deductible health plan at your workplace, you should contribute to an HSA in the event of unforeseen medical expenses.

 

I decided to contribute the max to my HSA (not FSA - those are garbage IMO) for 2020, including a $1200 company match. My plan is contribute as much as possible to the HSA so when I "retire" in 17 years I'll have sufficient reserves for health expenses.

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