Asked by Tyasia Lynah on May 22, 2024
Verified
What is meant by a penalty on early withdrawal of savings and under what circumstances is it deductible?
Penalty On Early Withdrawal
A financial charge or loss imposed on an individual for withdrawing funds from an account before a specified date or maturity period.
Savings
Money set aside for future use, often held in bank accounts, investments, or other financial instruments.
- Understand essential aspects concerning the deductibility of student loan interest.
Verified Answer
CF
Chloe FisherMay 26, 2024
Final Answer :
Banks often require minimum or fixed deposit periods for many certificates of deposit or time savings accounts and impose an interest penalty if the funds are withdrawn prior to the end of the agreed-upon term.This penalty is a penalty on early withdrawal of savings.The amount of the penalty is deductible as a for AGI deduction.
Learning Objectives
- Understand essential aspects concerning the deductibility of student loan interest.