Suppose you have three 1098s and each one has loans of 1M (one was original, one was sold, one was refinanced), you paid interest of 50K, and CA tax has a limit of 1M loans to be deducted. Ideally, you can deduct 50K from the CA tax as the three loans happens at different period (they were sold or refinanced).
The way how TurboTax calculated for CA tax is:
Loan 1: (1M - 0) / 2 = 500K
Loan 2: (1M - 0) / 2 =500K
Loan 3: 1M
and the deductible amount becomes 50K * 1M / (500K + 500K + 1M) = 25K.
The Deductible Home Mortgage Interest Worksheet assumed only 25K can be deducted from the CA tax return. This was wrong calculation and I can't manually fix the form.
@JohnB5677
@KrisD15
