My 1099-Int form has $201.00 Int received and a $193 penalty. Do I subtract penalty from interest earned and correct intrest earned to $8.00

[SharonD007 · Accepted solution]

No, don’t subtract the $193 early withdrawal penalty from the $201 interest. Report the full $201 as interest income (Box 1) and enter the $193 penalty (Box 2) separately. It will show up as a deduction on Schedule 1, line 18, and will be subtracted from your gross income.

When you enter your 1099-INT, you will check the box that says my form has entries in other boxes, and you will enter the penalty from box 2.

For more information, refer to the TurboTax article Filing Tax Form 1099-INT: Interest Income.