We recently cashed out a CD that was up for renewal. How do l figure the tax on it so we do not get slammed April 15th?

You only pay tax on the interest on a CD, & u pay that in the year that u earned the interest so u will not be getting ''slammed''.

For example, u put $1000 into a 5 year CD. That would pay about $40 per year interest. You pay tax on the $40 interest each year including the last year. The last year u cash it out & get $1200, which is ur original $1000 plus $40 interest per year for each of the 5 years. So whether u cash it out or renew it, u only owe tax on the interest of $40 - probably $4 to $10 depending on how much other income u have.

You will get a form 1099INT in 2009 which shows the taxable interest.
If you want to prepay the tax, go to irs.gov and download Form 1040ES and pay a percent based on your prior year is tax bracket.

If there was an early withdrawal penalty, you can deduct it on page 1 of your 2008 form 1040 in 2009

You won't. You do not pay taxes on CDs that you hold. You're only taxed on the interest that it earns, and with the current economy, that is probably not been much. Also, you've been paying taxes on that interest over time already.

You can ask the bank how much of the withdrawal was interest earned in 2008. Otherwise, the bank will send u a 1099INT which will show the amount of interest the bank has paid you. Enter this amount on the line for interest income on ur tax return. You do this each year, whether u have cashed in ur CD or not.

If the interest income will result in substantial additional tax, u can send in an estimated tax payment now. Use Form 1040-ES available at irs.gov. If the additional total tax is less than $1,000 on ur return, no penalty will be owed if u pay by April 15.

If it was up for renewal, there would not have been a penalty. You are penalized if you take it out early. The interest you earned is taxable income, and the bank or other institution will send you a 1099-int at the end of the year showing the amount, you do not have to calculate it. Depending on the time length of the CD, interest might be taxable annually, or at the end of the term of the CD.