If this was a CD inside an IRA, the early withdrawal penalty charged by the bank is not deductible.There are really two different things that get called “penalt...
An early withdrawal penalty on a CD isn’t treated as an itemized deduction. It’s actually an adjustment to income, which means it reduces your taxable income di...
Since you withdrew the CD in early 2024, the penalty happened in 2024, not 2023. That’s why it doesn’t appear on your 2023 1099-INT and why you can’t deduct it ...
What makes this confusing is that “earned,” “accrued,” and “paid” don’t always mean the same thing with CDs.Some CDs accrue interest daily but don’t credit it t...
One thing that sometimes causes confusion is how the CD is structured behind the scenes.Some CDs credit interest monthly or annually, even if you can’t withdraw...
