One of my 1099-INT shows an early withdrawal penalty for a regular CD. Can I deduct this from my tax returns and how using Turbotax?

[rjs · Accepted solution]

When you enter the 1099-INT in TurboTax, check the box below box 1 that says "My form has info in more than just box 1." Then all the other boxes will appear on the screen, including box 2 for the early withdrawal penalty. When you enter it there, TurboTax will put the deduction on your tax return. It will appear on Schedule 1 line 30, and will be subtracted when your Adjusted Gross Income is calculated on Form 1040 line 7.

[BobB7]

And just for your information, the item is an "adjustment" instead of a "deduction" and that's good because you benefit from it even if you don't itemize.

[tremllojh]

Thank you very much for the immediate answer and the clarification (adjustment rather than deduction). I appreciate it very much.

[rjs]

Some people call an adjustment an "above the line deduction." The official IRS term is "adjustment."

[tremllojh]

Thanks, rjs, for your help.

[DD210]

Does that "adjustment" carry over to the state return?

[BobinCT]

Yes it does carry over to the state return to the extent that the state income tax is based on federal adjusted gross income.