Question

TurboTax Premier Online is miscalculating (over deducting) federal mortgage deduction

Forum|Forum|5 years ago
May 17, 2021
1 reply
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I have a loan over $1m which was refinanced twice in 2020.

The first refinance (refinanced and paid off in 2020) included points, not shown on 1098.

I've merged three 1098s into one and then added a second with zero for most boxes and the correct figure for the points not shown on 1098.

TurboTax figures the federal tax incorrectly and the CA state tax correctly. Then, it puts in a positive adjustment for points and negative adjustment for interest in the state return. The points are correct on federal and state, and the (negatively) adjusted interest results in the correct final interest figure on state, but the federal interest is (interest + non-1098 points), which is the reason for the negative adjustment -- this is what made me dig in and spot the double-count of points on federal.

i.e. Schedule A, item 8a, interest and points on 1098, includes the points which are *NOT* on the 1098 (portion attributable to $1m of refinanced pre-2017 loan balance).

Schedule A, item 8c, *ALSO* includes the same portion of the points which are *NOT* on the 1098.

CA Adjustments 8a is the negative adjustment from ($1m loan balance worth of interest and incorrectly included points) to ($1.1m loan balance worth of interest only).

CA Adjustments 8c is correct - points attributable to $100k of loan balance.

Help?! Taxes are due tomorrow. (Also: how do we trust that TurboTax is doing the right thing with hundreds of stock transactions, which I can't hand-calculate, when it is so obviously doing the wrong thing with such a trivial thing as mortgage interest? The stock data also looks very questionable but there's no way I'm going to redo it all by hand, by tomorrow.)

D

DavidCAAuthor

Intuit had an estimated support hold time of 1 hour. I called. Held over 2 hours, still on hold, but I'm not going to hold indefinitely.

I made TurboTax calculate my correct Federal refund by entering half the actual points value, so it counts half of it in two places (i.e. has the correct total, but incorrect line items), and used that figure to e-file an extension via TurboTax. Fortunately, I'm due for a refund so an extension is relatively painless with the information from the completed forms. It seems like the best option - even if I do get through and Intuit can see this issue, they're unlikely to patch and deploy a corrected version of TurboTax Online in the next day.

D

DavidCAAuthor

I never got anywhere with Intuit on this (I filed for the extension so I could continue to work on it, but never managed to get a resolution).

I contacted them again this afternoon, the person I spoke to put me on hold to talk to a supervisor, then the call dropped and when I tried to contact them back, their support center was closed for the day.

Does anyone have any other way to report such obvious miscalculation bugs to Intuit? Do I just have to keep calling them?

It seems wrong to knowingly file an incorrect tax return and then depend on Intuit's guarantee that they will pay penalties and interest for their mistakes.

D

DavidCAAuthor

I called support again today, and they "solved" this for me.

Here's what happened:

they tried to transfer me to a team to help, but I refused to pay extra for 'live'
they accepted that my issue was a bug; they gave me a license code for the desktop version of TurboTax
- they advised I would have to fix in 'forms mode', but they were wrong, as per below...
I downloaded the desktop version (following their instructions to first create an empty tax return and select my state) and downloaded my tax2020 file from online
the wrong tax figures displayed, matching the online figures
I clicked into the Mortgage Interest section of Deductions & Credits
I clicked through and made no changes, just selecting some items which it didn't know my previous selection for
it updated to the correct tax figures, matching exactly the calculation I had done to file estimated taxes

So, this is a tax calculation bug in TurboTax Premier Online, and TurboTax Premier desktop edition does not have the same bug.