1098 HELOC question

[mateosbaby]

I received a 1098 for our now-closed HELOC (as of Sept 2019), but Box 2, Outstanding mortgage principal, was $0.  TurboTax isn't letting it be $0 or even $.01.  I contacted my bank like I was advised, and they said it is correct because as of 12/31/19, the balance was $0.  HELP!

[ReginaM]

Enter your outstanding mortgage principal as of January 1, 2019.  According to the 1098 instructions,  Box 2, is supposed to be your outstanding mortgage principal on January 1, 2019.    Please see the IRS Instructions for 1098 for more information.

[mateosbaby]

The bank said it's supposed to be the amount as of 12/31/2019.  I feel caught in the middle.  I don't have access to old statements since the account is now closed, so I'm not really sure what to do.

[mateosbaby]

I did email them again, purposely to send them the link with the instructions for how to fill out the 1098.  We'll see what they say.

[Carl]

Apparently the lender did not fill out the 1098 correctly per the IRS instructions. If they do not issue you a corrected 1098, then go ahead and enter the amount you "Know" it's supposed to be. Keep all of your paperwork associated with this - especially your e-mails with the bank. When the IRS computer generates the nasty-gram to you (in about 24 months give or take) respond within the timeframe that will be specified in that letter and include copies of your correspondence with the lender.

In the end, the lender will be penalized and fined because of their failure (refusal) to correct their error within 10 business days.

Oh yeah, wait at least 10 business days from the day you notify the lender of their error, before you e-file the return too. Otherwise, if they do issue you a corrected 1098, that "could" create a problem for you. Though I don't see how. But we're talking about the IRS here....

[mateosbaby]

So this is fun.  They sent me the info I needed already, but my balance on 1/1/2019 was $0!!!  LOL  So apparently we didn't use it until we went to fix up our house to sell, so it got used and paid off all within 8 or so months.  The house was sold in Sept 2019.  Now what?

[hhchamiii]

I have a HELOC which had zero balance at both beginning and end of the year, but not in the middle.  So we paid some interest.  Turbotax won't accept 0 as the balance, so I can't enter this form. Please advise!  

[ToddL99]

The solution is to enter "$1" as the beginning year loan balance and "$1" as the year-end loan balance. This won't have any effect on your tax calculations or your ability to efile.

From an economic perspective, it accurately reflects that you owed the same amount (virtually nothing) at both the beginning and the end of the year. It will, however, let the program know that you didn't forget to report at least some level of debt that would account for an interest expense deduction.

[ToddL99]

The solution is to enter "$1" as the beginning year loan balance and "$1" as the year-end loan balance. This won't have any effect on your tax calculations or your ability to efile.

From an economic perspective, it accurately reflects that you owed the same amount (virtually nothing) at both the beginning and the end of the year. It will, however, let the program know that you didn't forget to report at least some level of debt that would account for an interest expense deduction.