Banking Products

klink | Mar 23, 2013 | 180 posts since 2012

Just a general question and maybe fuel for thought. Are products (Cd's, MM accounts, RCA's and on) being offered by financial institutions (Banks, Credit Unions & etc.) that we talk about here which from our homes or offices can be bought over the internet from a location out of state taxable? I noticed in todays local paper the congress endorsed a measure that would allow states to tax out of state internet purchases and was curious if that could become a possibility? Comments most welcome and thanks.

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Answers

pearlbrown | Mar 23, 2013 | 2,299 posts since 2010

Klink, those transactions would not be taxable. We think of our activity as "purchasing" CDs, Money Markets, etc., but what we are really doing is opening new accounts. That activity is not taxable.

Yet.

Let's not give the government any ideas on how to continue to nibble away at our savings. ;=) They have plenty of ideas on how to do that already.

Ken Tumin | Mar 23, 2013 | 5,943 posts since 2009

Don't forget state income tax. It's not a transaction tax, but it's still costly for savers. Most states have state income tax which taxes interest income from any bank. Two states (NH and TN) have state income tax that only taxes interest and dividends. It would be interesting to know if there are any states that exempt interest from banks that are based in the state? (similar to municipal bonds). That would provide an incentive to bank locally. I'm just glad my state (FL) doesn't have an individual income tax.