The early withdrawal penalty is not directly subtracted from your interest income and it is not reported on Schedule B. Instead, it will be reported on Form 1040 Schedule 1 line 18 as an adjustment (subtraction) to your income.
When you see take a look at your Form 1040, the amount from Schedule 1 is reported on Line 10. Then, Line 11 is calculated by subtracting Line 10 from Line 9.
If you do not see that the number is being subtracted, please share details about which TurboTax product you are using.
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