Can early withdrawal penalty on CD be deducted from Interest paid

[MonikaK1]

Yes, you can deduct the early withdrawal penalty - but only for a taxable CD. When you enter the interest income on Form 1099-INT, check the box beside 'My form has info in more than one box 1'. Then enter the penalty in box 2. That will reduce your adjusted gross income by the penalty amount.

For a CD that is held within an IRA, there is no taxable event and nothing to deduct.

Any early withdrawal penalties will be included in box 2 of your 1099-INT form from the issuing institution and clearly labeled “early withdrawal penalty.”

[jkorloo]

Do I deduct the Early Withdrawal Penalty shown in box 2 from Box and enter it into Turbo Tax or is there a place to enter the penalty in Turbo Tax?

Thnx

[DoninGA]

On the Form 1099-INT the early withdrawal penalty is entered in box 2.

On the screen for entering the interest there is a box to check labeled My form has info in more than just box 1