How to deduct a penalty on an early withdrawal
In order to deduct the penalty on your early withdrawal, you must input a 1099-R in your tax return construction.
To find the 1099-R Penalty Exemption Page it should auto populate based on the inputs you made in the 1099-R. If you are having trouble finding the 1099-R Penalty Exemption Page, you can search in the sidebar search engine. The 1099-R Penalty Exemption Page allows you to list the following on early distribution exceptions.
Taxpayer’s amount subject to penalty
Exemption Type
Amount applied to selected exception
If the distribution was from an annuity contract
If the distribution was from a modified endowment contract
Source: irs.gov
- Enter the return, search Form 1099-R Penalty Exception Page in the Federal Return search engine to make the necessary inputs on this page
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