Given the low mortgage interest environment in 2020 I'm sure this will be a major issue for a lot of users. Similar to the same 2019 error, if you had one or more refinances in 2020 the Deductible Home Mortgage Interest Worksheet will not calculate correctly and in most cases cause you to lose a significant portion of your Home Mortgage Interest deduction.
So TurboTax asks you for mortgage balances as of 1/1/2021 and if you paid it off it asks you for the amount paid off and the date. By asking for the date I believe the intent was to calculate an average DAILY balance so it can determine the average ANNUAL balance to test against the 1,000,000 (or 750,000) threshold. Unfortunately, the worksheet simply ADDS all the balances. So if you had a $500K mortgage at the beginning of 2020 and refinanced it twice, the worksheet calculates your average balance as $1.5M which of course eliminates a huge portion of your deduction.
TurboTax needs to fix this ASAP. Someone seriously forgot to code the correct methodology. Otherwise, what would be a workaround? I went into Forms and I cannot alter anything. Checking the "I paid off the mortgage" box doesn't seem to do anything at all (I think they were relying on the paid off date mechanism.)
