Early Withdrawal Penalty

Early Withdrawal Penalty means:
a charge assessed against holders of fixed-term investments, principally certificates of deposit, if they withdraw their money before maturity. Such a penalty would be assessed, for example, if a person who had a 4-year CD withdrew the money after 3 years. The full amount of interest must be included in income, but a taxpayer is allowed a deduction for Adjusted Gross Income for any forfeited amount.

Description and Definition of Early Withdrawal Penalty

A penalty you pay for liquidating a certificate of deposit or time deposit account before its maturity date. You report your interest income in full but you are allowed to take an adjustment to your gross income for the penalty.

Resources

See Also

Further Reading

• Early Withdrawal Penalty in the West's Tax Law Dictionary
• Early Withdrawal Penalty in “A Dictionary of Taxation”