Question for the Money Doctors

Question submitted on Dec 12, 2022.

Question

withdrawing a CD before maturity usually includes a penalty of losing the interest and losing part of the original principal. is the penalty considered a capitol loss on your income tax? I've done this a few times to re-invest the money at a higher interest rate.

Answer

Hi, Withdrawing a CD before maturity does cause a loss of interest but not principle.  When you file your income tax return next year, look for a form 1099-INT which will indicate the loss of interest to report.  Hope this helps!

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