It is an adjustment to income. For 2023 the CD early withdrawal penalty goes on Schedule 1 line 18 which goes to 1040 line 10.
And if you have an amount on Schedule 1 line 18 that is a good thing. It's not a penalty on your tax return. It's a interest penalty you paid (lost) when you cashed in a CD early at the bank. You get to subtract it off your tax return. It comes from 1099 INT box 2.
