Is the early withdrawal penalty that I paid when I took money out of my CD tax deductible?
Yes it is. At tax time, you will receive a 1099 in the mail. On the 2011 Form 1040, the amount was entered on line 30.
Yes. The entire penalty amount may be deducted on your personal 1040 (line 30) even if it exceeds the income or interest received.
See IRS Publication 550 for more details on this topic.
