Penalty on Early Withdrawal of Savings

An amount entered in Box 2 of Form 1099-INT represents interest or principal forfeited because of early withdrawal of time savings. The amount entered in the 1099-INT menu flows to Schedule 1 as an adjustment to income.

This kind of penalty might also be included on a Schedule K-1 from a passthrough entity as follows:

• 1120-S Schedule K-1: Box 12 "Other Deductions" with code S
• 1065 Schedule K-1: Box 13 "Other Deductions" with code W

Since these particular K-1 boxes are used for a variety of deductions, the amount entered in the Schedule K-1 entry screen doesn't carry automatically to any form or schedule, so you'll need to enter it directly in Schedule 1 as an adjustment to income.

Form 1099-INT

To enter an early withdrawal penalty on Form 1099-INT in Tax Processors Plus Desktop, from the Main Menu of the tax return (Form 1040) select:

• Income
• Interest or Dividends (Sch B, 8815) - Select New, then Form 1099-INT.
• Payer's Name - Enter the payer's name, then click Ok.
• Early Withdrawal Penalty (Box 2) - Enter the penalty amount.

Schedule K-1 (Form 1065 or Form 1120-S)

To enter an early withdrawal penalty on a Schedule K-1 in Tax Processors Plus Desktop, from the Main Menu of the tax return (Form 1040) select:

• Adjustments
• Penalty on Early Withdrawal of Savings - Enter the amount shown on the Schedule K-1.

Note: This is a guide to entering the penalty on early withdrawal of savings into the Tax Processors Plus Desktop program. This is not intended as tax advice.