Question

Deductible Home Mortgage Interest Worksheet

Forum|Forum|6 years ago
January 31, 2020
16 replies
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I refinanced once - and my mortgage was also sold from one bank to another in 2019 - so I received 3 1098 Forms.

However, on the Deductible Home Mortgage Interest Worksheet, TurboTax adds the full amount of all 3 loans together (even though 2 of them have been paid off) to calculate the average balance of all home acquisition debt (part 2, line 2), so my debt appears 3 x larger than it should and now exceeds the loan limit, resulting in a limited interest deduction.

How do I fix this? Do I just manually adjust the total home acquisition debt to the new mortgage balance as of 01/01/2020?

B

bwergeles

Since you have multiple mortgage interest entries, verify that your entries are correct for the following:

Outstanding mortgage principal as of 1/1/2019
Mortgage origination date
Mortgage acquisition date (if applicable)
For the refinanced loan make sure you marked "Yes" to the question "Is this loan a home equity line of credit or a loan you've ever refinanced?"

TurboTax uses this information to calculate your mortgage interest deduction. Please see this TurboTax article for more information.

S

squirrels17Author

Thank you for your reply @bwergeles . I double-checked to ensure that I entered all the information correctly in regards to the points you mentioned. Fortunately, for the federal return, TurboTax asks if the mortgage limit applies to me (my mortgage balance is below the limit, so I can answer 'no' and the full mortgage interest is deducted). However, on my California return, TurboTax is still adding the balances for all 3 "versions" of my mortgage in 2019 (the original, the refinance, and the transfer) on the 540/540NR Deductible Home Mortgage Interest Worksheet. As a result, the total "home acquisition debt on the date it was last secured by [my] home" is 3x the actual balance, and it limits the amount of mortgage interest deducted on my state return.

However, TT does allow me to manually adjust the "Total Home Acquisition Debt and Grandfathered Debt." To correct the miscalculation, could I enter the outstanding mortgage principal as of 1/1/2019 there?

C

Cali938292

Hi,

I'm running into the exact same issue. I have three (3) 1098 forms. On the California State Return, under "California Mortgage Information" - there is a field "Total of your home acquisition debt on the date it was last secured by your home(s)". TurboTax is taking the mortgage amounts from all three (3) 1098 forms and adding them together. I cannot find a way to correct this. Please advise. Thanks.

R

rodaperry

I am having the same issue. I refinanced my home using the same finance company; so i have two 1098s. I didn't take any money out. It was a VA streamlined refinance. Should be simple. TurboTax is adding the loans together and putting me over the $750K limit. I went from having a $3,500 refund to owing $300.

I've tried numerous iterations in TurboTax to get past this issue.

S

squirrels17Author

bumping this since no definitive answer has been provided.

I've seen other threads suggesting that $0 or $1 should be entered in Box 2 for loans that had been refinanced/transferred, but that is not what my 1098's have in Box 2. I made sure to select the option that states that these loans had been refinanced, but it is still adding all the balances together as if they are each new mortgages. The only thing I can think of to do at this point is manually adjust the total home acquisition debt .

R

rodaperry

Best solution is to START OVER. After numerous attempts over many days, I gave up and started a from scratch with a new return. I went to the Mortgage Interest part first. I put "$0.00" in Box 2 for the 2nd loan (refinance). This worked for me.

Too bad the TurboTax software has this Bug for 2019.

M

mjtaxtime

I'm having a similar issue with multiple forms, just without CA being the State. I had an original loan in 2018 which was refinanced in 2019 and immediately transferred to another lender. I therefore have 3 1098's but the questions that are asked don't really make sense. This seems like a very common occurrence and the QA should be a lot clearer as to the right selection to be made. After reading through these posts, I'm still unsure of what the right thing to do is...and adding them all into one 1098 doesn't seem like the best way to go.

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Pyrarraz

With the help of a real good TT employee on the phone, I found a workaround.

In "Forms," find the "Tax and Interest Deduction Worksheet."

Scroll down to the Mortgage Interest Limited Smart Worksheet."

If field A 1 is blank, right click it, and select "Override", then write in the total of mortgage interest paid, from all 1098 forms.

Once field A 1 has the total of mortgage interest paid, copy that amount.

If field A 2 is blank, right click it, and select "Override", then AGAIN write in the total of mortgage interest paid, from all 1098 forms.

That should fix it!

N

nobie

Pyrarraz, can you identify what TurboTax product you are using, i.e. Online, Online Premium, Desktop?

"With the help of a real good TT employee on the phone, I found a workaround.

In "Forms," find the "Tax and Interest Deduction Worksheet."

Scroll down to the Mortgage Interest Limited Smart Worksheet."

If field A 1 is blank, right click it, and select "Override", then write in the total of mortgage interest paid, from all 1098 forms.

Once field A 1 has the total of mortgage interest paid, copy that amount.

If field A 2 is blank, right click it, and select "Override", then AGAIN write in the total of mortgage interest paid, from all 1098 forms.

That should fix it!"

L

liudan30

I have exactly same issue, and none of the solution above works for me.

P

Pyrarraz

I'm so sorry to hear that. The employee recognized that it was a bug, and I (kinda) trust that they will fix it soon...

V

veroweb01

Turbo Tax has a bug and needs to fix it with regards to the Mortgage Interest Deduction. We're supposed to get the question asking if the loan has been sold and it's not coming up for 2019. I'm guessing this error has to do with the new law changes. Regardless, we should not have to add up all 3 1098s and enter as one, especially if the 1098s are from different lenders. That is not how it will be reported to the IRS. I would think this would cause a red flag on the tax return. I paid for this tax software and I expect it to work properly. Turbo Tax NEEDS TO FIX THEIR ERROR....

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nobie

Veroweb01, completely agree. This is total BS. On the phone for an hour with a live agent and got nowhere.

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mas939

I have the same issue, none of the solutions listed here work for me. I have spent over 2 hours chatting with turbotax 'experts' in two separate occasions but they are unable to find a solution. How is this acceptable for TurboTax? Refinancing must be one of the most basic situations the software should be able to handle.

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w729j922a802

My situation is similar to the below but we did not refinance. The mortgage servicing company changed ad we received two 1098's for the same mortgage. I followed the guidance below and checked "no" to the question is your mortgage interest limited. When I exit and go back to the step by step entry TT changes the answer and limits my interest deduction. I can't figure out how to override TT and have it stick.

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jlbrick

This seems to still be an issue in TurboTax 2020. I created this post:

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/bug-with-refinance-on-a-large-mortgage/01/1820267/highlight/true#M170286

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Mjaeg

This happened to us this year too. Tore my hair out until I realized that our initial refinanced loan showed the outstanding balance in box 2, but also had additional information at the bottom stating the ending balance was $0. So I entered $0 for box 2, and it came back later asking to review, where it said that the beginning balance of the loan was needed (same number as box 2). Entering that number at that point worked for me.