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. In Tax Processors Plus Online, when this amount is entered in the interest income menu it 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 Online, from the Federal Section of the tax return (Form 1040) select:

• Income
• Schedule B - Forms 1099-INT, DIV, OID
• Interest or Dividend Income - Select Begin or + to add a new entry if needed.
• Interest Income, Form 1099-INT - Click the button to select this option, then Continue.
• Payer's Name - Enter the payer's name. (The payer's EIN and address info is optional.)
• If needed, indicate if the 1099 is for the taxpayer, the spouse, or joint.
• 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 Online, from the Federal Section of the tax return (Form 1040) select:

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

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