Hi,
Thank you for your thoughtful and thorough reply! I did locate the Home Mortgage Interest Limitation Smart Worksheet at the bottom of the Home Mortgage Interest Worksheet. I am using the Windows Desktop Deluxe Version of TurboTax, and accessed this using Forms.
I also observed the entries for Beginning Balance (Line #3) and Ending Balance (Line #6). Based on your response, I also now understand that TurboTax intends to use the average of the Beginning and Ending balance in lieu of entering and averaging 12 monthly balances. However, when I calculate the limitation and do the actual math, TurboTax does not use the Average Balance as described above. The actual limitation calculated by TurboTax used only the Ending Balance. I therefore believe that this is an error in TurboTax. To be specific, I can match Acquisition Interest (Line #8) on this form which was used in my tax return to the penny by calculating (Acquisition Debt (Line 7) / (Ending Balance (Line #6) ) * Interest Paid (Line #1). When I repeat the calculation using the Average Balance, I get different results. So, thank you so much for your reply, but unless I am missing something I still believe this is an error in TurboTax.
