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Penalty On Early Withdrawal Of Savings - Report On Schedule 1 (Form 1040)

Kirkland
  |     |   377 posts since 2014

Just a reminder to all those that took early withdrawal penalties in 2022, your 2022 1099-INT will show your early withdrawal penalty in Box 2. Box 1 will include your total interest income, Box 2 your penalty.

Report your Box 1 amount with your other interest income on Schedule B Part 1.

Report your Box 2 early withdrawal penalty as follows:

Attach to your Form 1040, Schedule 1 "Additional Income and Adjustments to Income". Look on that page 2 Part II Adjustments to Income Line 18 "Penalty on early withdrawal of savings". Report it there. Total that schedule on Line 26, and then carry that amount over to Form 1040, Income Line 10 "Adjustments to income from Schedule 1, line 26".

This is an above the line deduction, in that it gets subtracted out (on line 10) before arriving at your Adjusted Gross Income. The only nice gift from the IRS. :)

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12


lou
  |     |   1,004 posts since 2010
Remember, the penalty represents the interest already included in Box 1. In the end, it's just an offset.
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3
sams1985
  |     |   781 posts since 2022
So if i had 20k of interest earned of which 7k was deducted as a penalty i would leave the full 20k on schedule B part 1 and then put 7k on 1040 schedule 1?
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2
Kirkland
  |     |   377 posts since 2014
Exactly correct
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4
lou
  |     |   1,004 posts since 2010
There are no gifts from the IRS, at least with respect to EWP's.
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2


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