Will an amount in box 2 of the1099-INT change my interest income?

[Tim Fees]

I filled in the amount in TurboTax but the overall income did not change

[VolvoGirl · Accepted solution]

It is an adjustment to income.  For 2023 the CD early withdrawal penalty goes on Schedule 1 line 18 which goes to 1040 line 10.

And if you have an amount on Schedule 1 line 18 that is a good thing.  It's not a penalty on your tax return.  It's a interest penalty you paid (lost) when you cashed in a CD early at the bank.  You get to subtract it off your tax return.   It comes from 1099 INT box 2.  

[docssupervac · Accepted solution]

Interest income is still the same--the penalty is an adjustment to income on 1040 Schedule 1, Part II, line 18. The total of all the subtractions on Schedule 1, Part II will transfer to line 10 on the 1040 form ultimately lowering total adjusted gross income on line 11 of the 1040.

[SRB25]

What about if the 1099-Int with an Amount in Box 2 was received by a Trust.  Where on the Form 1041 is the early withdrawal penalty reported?

Thanks.

[DianeW777]

It depends. You can either reduce the interest income by the early withdrawal penalty or you can enter it under 'Other Deductions' on Line 15a for the estate return.

@SRB25