Penalty on Early Withdrawal of Savings

Case Study

Trudy has one Form W-2 and one Form 1099-INT and no other income. Her Form 1099-INT shows both interest income and an early withdrawal penalty. Trudy does not pay alimony, and she did not make a contribution to a traditional IRA. She will not itemize deductions, and she cannot claim any tax credits.

Trudy can claim the adjustment for the penalty on early withdrawal of savings on Form 1040, line 30.