I received IRS notice "Our records show you claimed too large of a Home Mortgage Interest Deduction on Schedule A of your 2024 Form 1040 tax return". What am I doing?

[yysegedin]

Filed with TurboTax and received this notice on 12/15: Our records show you claimed too large of a Home Mortgage Interest Deduction on Schedule A of your 2024 Form 1040 tax return. Review and fix any incorrect home mortgage interest claims. This may help you avoid additional interest or penalties. How do i review my return and determine if it's right or wrong? and what the rules for that deduction?

[rjs]

Did you get a paper IRS notice in the regular postal mail, or did you get an email or text? If it's an email or text, it's a scam. Ignore it, and you can ignore the rest of this reply. The IRS does not send notices by email or text.

If it's a paper notice, what is the notice number or letter number at the top right, starting with CP or LTR? Read the entire notice carefully. Does it say how much your deduction was, and how much they think it should be? Is the amount that they say you claimed the same as the amount on line 8a of the Schedule A in the 2024 tax return that you filed?

There are basically two possibilities. Either the amount that you entered in your tax return is more than the amount in box 1 of the Form 1098 that you received from the lender, or your deduction exceeded a limit. The itemized deduction for home mortgage interest is limited based on the outstanding balance of the loan, not on the amount of the deduction. Check that the amount that you entered in boxes 1 and 2 of the 1098 in TurboTax is the same as the amounts in boxes 1 and 2 of the actual 1098 from the lender.

[Mike9241]

i attached a link to IRS 2025 (nothing changed from the 2024 pub) PUB 935 which contains the rules for the deduction and a worksheet. read the pub in its entireity and if you have questions post them back in this thread

https://www.irs.gov/pub/irs-pdf/p936.pdf 

what's missing is a clear explanation if you refinanced the property for more than the existing debt at that time. Qualified mortgage debt is only the amount that's the same as the refinanced amount unless you used the excess to buy, build or substantially improve the property. Multiple refis can present a  problem in determining the eligible amount, 

[yysegedin]

Thanks for your response. I received a paper notice dated 12/15/2025, Notice: CP28A. It doesn't say any details relating to the return other than the following.

"Our records show you claimed too large of a Home Mortgage Interest Deduction on Schedule A of your 2024 Form 1040 tax return. Review and fix any incorrect home mortgage interest claims. This may help you avoid additional interest or penalties.

There are limits to the amount of mortgage interest you may deduct. Home Mortgage Interest Deduction is limited by your mortgage size (outstanding mortgage amount) and date (loan origination date). You may only claim an interest deduction for a mortgage amount up to $750,000 (for mortgages dated after December 15, 2017)."

My mortgage originated in 2022 at 757,400 and was transferred to another lender on Apr 5 2024 so I've got 2 1098 forms for 2024 and entered both.

First 1098:

Box 1: 10,875.83

Box 2: 776,999.76

Second 1098:

Box 1: 32,403.45

Box 2: 742,571.10

Tax return Schedule A box 8a: 43,279

(my 2023 1098 from the same lender had box 2: 755814.65 which is interesting to me increasing in 2024, but thinking it might be related to COVID related deferral of 6 months payments around 31k total)

[jrW9A8dBAY]

I got the same letter.  I wonder if they are actually doing the math or they know that TurboTax messed it up.  I'm pretty sure it was computed wrong even though I put the information in correctly - particularly when there are two 1098s.

https://ttlc.intuit.com/community/home-loans/discussion/mortgage-deduction-limit-computed-incorrectl...