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If i put in 5K at ing direct and say I want to take all my 5K out after 6 months, do i make 5000 X 0.042 X 6/12= 105 dollars?
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Yes
It is still wise to file your taxes but if your income is only going to be that much then no, from my understanding you will not have to pay taxes on it.
Here is an informative article relating to your question.
http://www.bankrate.com/brm/green/taxes/basics5-4a.asp
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Not according to the IRS. Any interest credited to a nonretirement account and that you can withdraw is viewed by the taxman as income to you, even if you leave it untouched. Each January, you should receive from your bank a form showing how much interest your account earned. A copy of this form, called a 1099-INT, also goes to the IRS to make sure that tax payments on it don't fall through the cracks.
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