T-Bills and Taxes
Hello Terry –
I love what you do – educate on finances – in all the ways you do it. Thank you!
T-Bills – you mentioned there is no State Tax on interest earned via T-Bills. Did I get that right? Therefore it sounds like Federal taxes must be paid then on the interest earned. (But not on money used to purchase T-Bills as that typically will be money which is already taxed.) So far so good? Will the Treasury send out annual reports after year-end showing what amounts must be claimed on our tax forms?
Thank you.
Terry Says
T-bill interest is taxable on your Federal tax return in the year the T-bills mature. You’ll get a 1099 on the TreasuryDirect.gov website detailing the interest you earned.You print it out and file it with your tax return.
Since you cannot buy T-bills in a tax-sheltered retirement account, you are correct that this is after-tax money. So the only taxes are paid on the interest you earn.
Read this for more: https://www.terrysavage.com/t-bills-beat-cds-2/