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 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.
To enter an early withdrawal penalty on Form 1099-INT in TaxSlayer ProWeb, from the Federal Section of the tax return (Form 1040) select:
- 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 TaxSlayer ProWeb, from the Federal Section of the tax return (Form 1040) select:
- 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 TaxSlayer ProWeb. This is not intended as tax advice.