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

Once you have completed the Form 1099-R Input Page:

1) Edit a Return in Progress and search Form 1099-R Penalty Exception Page in the Search tool