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I'm reading How to Retire Early and Live Well by Gillette Edmunds and came across an interesting comment regarding interest paid on Certificates of Deposit (CDs) on Page 175.

Edmunds writes "The interest on both standard CDs and brokered CDs is not paid until the CD matures. For tax purposes, there is no tax liability until interest is paid. Thus you can defer taxes on the interest for the length of the CD plus the number of months until your estimated tax payments or final tax payments are due."

Am I missing something here? If you have a 5 year CD, don't you get a 1099 each year for the interest earned on the CD, even if you reinvest it? Does Uncle Sam really let you slide and pay taxes on 5 year's worth of interest when the CD matures?

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