when you hold a cd the bank will apply interest to your account at regular intervals this is usually done either monthly or quarterly and will show up on your statements as earned interest 
just like interest paid on a savings or money market account interest will accumulate and be reported to you in the new year as interest earned then you report it as income when you file your tax return 8for tax reporting purposes your cd earnings are taxed when the bank applies them to your account regardless of when you withdraw your cd funds 8