Am I subject to IRA interest tax on the interest my IRA earns, or am I only subject to IRA interest tax if I take an IRA distribution?
You aren’t subject to IRA interest tax on the interest your IRA earns while it remains in your account. Instead, you’ll be responsible for any IRA interest tax when you take distributions from the traditional IRA.
If you have Roth IRA distributions, they’re tax-free if both of these are true:
- You held the account for five years.
- You take the distribution for one of these reasons:
- Over age 59 1/2
- Death or disability
- Using the distribution as a qualified first-time homebuyer (up to a $10,000 lifetime limit)
Related Resources
How are mutual funds taxed when sold? Learn more about reporting mutual fund sales with the tax experts at H&R Block.
Does receiving unemployment benefits affect your refund and is it taxable income? Learn more from the tax experts at H&R Block.
Considering a withdrawal from your 401(k) or IRA due to the impacts from the coronavirus? Learn from tax experts at H&R Block’s what you should consider.
Learn more about dividends and how they affect your taxes from the experts at H&R Block.
