rjs
Level 15
Level 15

Retirement tax questions

No, you can't subtract it. But the penalty will be subtracted from your income on your tax return. When you enter your Form 1099-INT in TurboTax, enter the full amount of interest in box 1, and check the box that says "My form has info in more than just box 1." That will give you a place where you can enter the box 2 amount. That amount will appear on Schedule 1 line 18 and will be included in the total adjustments on Form 1040 line 10. Line 10 gets subtracted from your income to arrive at your Adjusted Gross Income (AGI) on line 11.