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I am 65 nad have to paid a penalty, fro withrowing My IRA, can I claim it on the federal income tax?

I am 65 years old, and I need to know if I can claim it on the federal income tax. This is a penalty for withdrowing My money before the 7 yars they gave on the contract tha I sign with the bank.

Public Comments

1. It is not a deduction. It is part of your income and you needed to pay taxes to cover it, but you will report it. Your hope should be to recover the taxes and not the penalties. Sorry. edit. Correction, if on your 1099INT or 1099OID you find a penalty is stated list that amount on line 30 of your 1040. But as I remember it that is a tax penalty and not a banking penalty that will appear on that form. There are two sorts of penalties for early withdrawals, one relates to the bank and the other relates to tax benefits of long term investment instruments. I assumed it was only the bank penalty.
2. Hi, I am not sure from your question about exactly what you were holding in your IRA but, it sounds like you have some sort of contract with the bank for your IRA that has a penalty if you withdrawal before 7 years. This sounds like you may have a CD or an annuity that has a early withdrawal penalty. If this is the case it is not deductible on your income tax. If you have a Certificate of Deposit for 7 years in your IRA then, the bank will charge you a penalty if you want to exchange it for cash before it matures i.e., before 7 years. Typically, there are not contractual arrangements for IRA's unless you bought into some type of contractual purchase plan which as you probably know at this point isn't a good idea.
3. If what you paid was an early withdrawal penalty, then yes you can deduct it on your taxes. Early withdrawal penalties go on line 30, Form 1040. Lee, Enrolled Agent This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided. Click on my profile to learn more.