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January 30, 2025
Question

In the standard deduction section it shows $30,750 but on federal review section it states "...which included a $900 penalty for early withdrawal of savings." Why?

  • January 30, 2025
  • 3 replies
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In the standard deduction section it shows $30,750 but on the federal review section it states "You took the Standard Deduction of $30,750. Your total deductions were $31,650, which included a $900 penalty for early withdrawal of savings." why?

    3 replies

    February 7, 2025

    Did you cash out a bank CD early?  Or take a distribution from a Retirement Account?  TurboTax is telling you that your Itemized Deductions totaled $31,650, but since a $900 Penalty was subtracted, you are getting a deduction of $30,750. This is the Itemized Deduction; the Standard Deduction for MFJ for 2024 is only $29,200. 

     

    If you're using TurboTax Online, in the left-side menu go to Tax Tools > Tools, then choose View Tax Summary from the pop-up menu.  Back at the left-side menu, choose Preview My 1040 to see the details on your return.

     

    Here's more info on Penalty for Early Withdrawal of Savings.

     

     

     

     

    February 7, 2025

    Thank you for your response.  I did not cash out a CD early.  I was 60 years old last year so all IRA withdrawals should not penalized since I'm over 59 1/2.  Do you have any other clues or is this a bug that needs to be fixed?

    February 7, 2025

    I found the issue.  When I uploaded a photo of a 1099-INT form, Turbo Tax put a $900 amount in box 2 - Early Withdrawal Penalty, which was NOT on the original form. Once I corrected that to $0 the problem was resolved. So there is an issue with Turbo Tax photo upload of 1099-INT.

    SteamTrain
    Employee
    February 7, 2025

    Yep....the "AI" that interprets pictures and PDF uploads is FAR from flawless.

     

    You absolutely MUST edit/examine every document you enter that way.

    ...or perhaps never use it at all...

    ____________*Answers are correct to the best of my knowledge when posted, but should not be considered to be legal or official tax advice.*