Question

Will there be a fix for Turbo Tax Pub 936 Mortgage Deduction Bug for Tax Year 2021?

Forum|Forum|4 years ago
February 9, 2022
3 replies
0 views

The software incorrectly fills out the Pub 936 mortgage deduction worksheet when user has two 1098 forms for mortgage interest, one for mortgage acquired before 2017 (but after 1987) for < $1M, and one for a mortgage acquired after 2017 with principal > $750K (in the case where home is sold and a new home is purchased). It sums both principal values under “mortgages acquired after 2017”. When the new, more expensive home is purchased late in the year, and little interest is paid, it erroneously scales the fully allowable mortgage interest from the mortgage acquired before 2017 by the factor of the new 750K mortgage deduction limit over the current mortgage principal.

Even worse, “completecheck” notices this error but gets caught in an endless loop because it points to the top of the Pub 936 worksheet (where names are) as the error, and no fix to names solves the problem. So turbotax never exits completecheck and you cannot file.

TurboTax Premier Online

AliciaP1

The "Outstanding Mortgage Principle" amount for the 1098 on the sold house should be $0. This way, when both 1098s are "added" the outstanding balance is correctly shown as the outstanding balance on the current mortgage.

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E

edwcarney

The Box 2 amount is required (by the IRS) to be the outstanding mortgage principal on 1 January 2021. TurboTax will not allow the amount to be $0.00 in the Box 2 entry item for the Form 1098.

J

JillS56

There is no known bug for Mortgage Deduction for Tax Year 2021. Depending on your situation there are a couple of ways to handle this.

If you took the mortgage out during 2021 the amount in Box 2 should be 0 and the date of the mortgage needs to be in Box 3.
If you sold a home and paid off the mortgage and purchased a new mortgage Box 2 for the mortgage you sold should have the balance as of 1/1/2021 in Box 2 and the loan date in Box 3.
Box 2 amount on your new home purchase should be blank because there was no balance on this loan as of 1/1/2021. You should leave that box 2 blank in TurboTax and be sure to enter the mortgage origination date in box 3.
If you have a 1098 and you still have the loan, you need to put the balance as of 1/1/2021 in Box 2. If your 1098 is blank you will want to contact your mortgage company and ask for a corrected 1098 or get the amount that should be in Box 2. You may be able to determine this amount if you can log into your mortgage account online.

Y

yuhsink

This is indeed a bug. The solution suggested below seems to be totally wrong when you enter 0 for box 2. That would just make your entire interest deductible which shouldn't be the case if the loan amount is > 750k