Do you report early withdrawal penalties on CDs on your 1040?

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Do you report early withdrawal penalties on CDs on your 1040?

I had several CDs at the bank. I cancelled some of them to help buy my house. Say the CDs earned $200 in interest over the year, but I only walked away with $150 in interest due to $50 in penalties. On the 1040, do I report $200 in earned interest or $150?

2007-01-29 14:02:34 · 2 answers · asked by Brett B 2 in Business & Finance ➔ Taxes ➔ United States

2 answers

You report the $200 as interest, but then you report anadjustment for the $50 penalty on line 30.

2007-01-29 17:57:14 · answer #1 · answered by Judy 7 · 1⤊ 1⤋

Yes, early withdrawal penalties are taken as adjustments for AGI on the 1040.

2007-01-29 14:15:32 · answer #2 · answered by jseah114 6 · 0⤊ 1⤋