Q:

Is interest on an IRA reportable?

A:

Quick Answer

Interest on an IRA should not be reported as tax-exempt interest, according to the Internal Revenue Service. While interest in a traditional IRA is not taxed when it is earned, the taxes on it are deferred until it is taken out as a distribution, the IRS states.

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Full Answer

The ability to defer taxes on contributions and earnings is one of the major advantages of an IRA, and, in some cases, IRA distributions may not be subject to tax at all, advises the IRS. The complete rules regarding IRA contributions are found in IRS Publication 590-A, and the rules regarding IRA distributions are found in Publication 590-B.

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