I put tax-free money in an IRA CD and have a question.

Thanks for sharing—this kind of situation can definitely be confusing, especially when IRAs and CDs get mixed together.

It sounds like you put $6,000 into an IRA CD (likely a traditional IRA), but didn’t take a tax deduction at the time. Then you cashed it out, and now you’re being taxed on the interest.

A few things to think about:

• IRA CDs grow tax-deferred, meaning you don’t pay taxes on the interest each year like with a regular CD—but you do pay taxes when you take the money out (unless it’s a Roth and meets qualified distribution rules).

• If you didn’t deduct the contribution when you made it, that contribution might be considered non-deductible. In that case, only the interest/earnings should be taxable—but you’d need to have filed Form 8606 with your tax return the year you made the contribution to track the basis.

• If your income is low (as you mentioned, no taxes owed last year), you may still have to report the interest—but it might not result in any tax due again, depending on your total income and standard deduction.

It may be worth checking if Form 8606 was filed when you made the contribution, or asking a tax preparer to help you clarify how the IRS will treat it. Sometimes it’s just a matter of paperwork, not money out of pocket.