Greetings Community!
So, this isn't actually a question, rather it is a solution. Without dissing the good folks at TT, they dropped the ball when developing the software as it relates to TurboTax handling two (or more) 1098's for the same indebtedness. That is, when the servicing agent changes during the year. This is the work-around solution I devised for my particular circumstance.
The issue is how TurboTax treats the value in box 2 of the 1098. The box 2 value from the loan servicing agent that transferred your loan will show the balance as of January 1 for the reporting year. This amount reflects the value of the loan at the beginning of the year - not the year-end balance. The form from the loan servicing company that received your loan (current servicing agent) will probably be empty (no values). This is because they do not have the responsibility of reporting the beginning balance of the loan since they were not the servicing agent at that time. Unfortunately, TurboTax will not allow you to proceed with the tax preparation unless a value greater than $0.00 appears in Box 2 of the input screen. Here's the workaround:
Complete the form, but leave the field in Box 2 blank. Once the form is complete, and before selecting the "continue" option, switch to the forms view in TurboTax. After launching the forms view, locate the "Home Interest Worksheet" (shown as, "Home Int Wkst (name of your servicing agent)" which will be noted as "Not Done". Open the worksheet and scroll to the point where you see the line items that reflect the boxes on Form 1098. Be sure Box 2 accurately reflects the value of Box 2 on the 1098 you received from your servicing agent. Before switching TurboTax to the Step-by-Step view, select a different form from the Forms Menu, then navigate back to Step-by-Step to finish preparing your returns. Ignore the "errors" shown by TurboTax when you run your error check as TurboTax doesn't know how to accurately report this situation.
This strategy worked successfully for our tax preparation, which was made all the more important because the loan values added together caused a reporting error for our CA returns, resulting in a tax increase of about $400. It was definitely worth our time to ensure this issue was resolved.
Good luck!
@KathrynG3 @Kat @MaryK1 @ColeenD3 @Irene2805 @DanaB27
