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March 7, 2022
Question

In TurboTax, I am getting asked to enter proceeds from my 1098 mortgage statement. I have no proceeds on that 1098. I have no idea what this is.

  • March 7, 2022
  • 1 reply
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I don't know why I'm being asked this or what to answer. It seems to think I refinanced or make improvements to my home but I didn't.

1 reply

KrisD15
March 7, 2022

You may need to delete the 1098 and re-enter paying close attention to the interview questions. 

 

Interest on loans taken to purchase, build, and/or improve your home (Mortgage Interest) is usually deductible. 

To claim the interest, it is added to your Schedule A and you would elect to "Itemize Deductions" in lieu of taking the Standard Deduction. 

 

Several years ago, requirements for interest to be eligible for the deduction changed. If a person refinances and takes out any cash, the interest on the new loan might be limit. 

The information needed to determine this is not listed on the 1098; Therefore, the TurboTax program asks interview questions which may seem confusing. 

The program needs to know:

If you took out any cash (is the new loan more than the balance on the old loan)

If you did take out cash, what did you do with it? Added a room (improvement, so yes, the full interest is deductible)  or bought a car (not related to the house, so not deductible)

 

Again, if you end up using the Standard Deduction, mortgage interest is not advantageous to your tax liability (it isn't used)  

 

Please go back to the entry for the 1098, delete it and enter again. 

If you did not refinance, this 1098 would represent the original loan and you should not be seeing any questions about proceeds. 

 

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