Investors & landlords

DianeW777 · ‎February 24, 2021

A penalty for early cash out or redemption of a bond or certificate of deposit is considered an early withdrawal penalty in IRS terms.

Once you enter the penalty for early withdrawal in the 1099-INT, Box 2 (must select the checkbox for 'My form has info in other boxes (this is uncommon)', this becomes an adjustment to income. The full amount of interest will show on the 1040, Line 2b and the adjustment is entered on Schedule 1, LIne 17.

You can use the Preview My 1040 tool to view before you complete your return.

By using the Tax Tools you can take a quick review of your 1040:

To find Tools:
- Sign into your TurboTax account and open or continue your return.
- Select Tax Tools in the left menu.
- You'll find Tools beneath Tax Tools.
- Select View Tax Summary
- Select Preview My 1040 (left black panel)

See the image below showing your adjustment - scroll to the Adjustments to Income section.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"