Early Withdrawal penalty on IRA account.

[Safire]

Can I take a deduction for this?

She did not withdraw any money, she closed out one CD for a higher yeild CD, which even after the penalty, the bank told her she would come out better.

[geekgirldany]

I believe when its a cd the early withdrawl is listed on line 30 adjustments on 1040. I assume she earned interest on the cd which should have shown the early withdrawl penalty.

[Safire]

Yes normally. But this was an IRA account. I'm thinking that since it's in an IRA I cannot take the deduction because I would not have counted the interest as income.

Am I right?

[OldJack]

Fees paid from the IRA account are not deductible in the same manner that the interest earned is not taxable.

[geekgirldany]

yeah that's right. I just saw CD and was thinking different. Didn't see IRA

[Safire]

OK, thanks guys. I thought that was right but just wanted to be sure.