During the interview questions, the values from the various boxes of the Forms 1098 end up on the Deductible Home Mortgage Interest worksheet. The worksheet calculations then result in a value to be entered on schedule A.
While it is true that the IRS receives copies of the Forms 1098, the specific values from that sheet do not appear on the individual tax return in most cases. In fact, in certain cases such as a cash-out refinance wherein during a refinance, the borrower gets a check, one would have to change the values on the worksheet to split out the principal listed on the Form 1098 to show what is what is not part of the home acquisition debt.
I know that there is apprehension about filling out values on the interview screen on TT Online that do not correlate to the boxes, but those values are used by the algorithm for the worksheet.
The online version does not allow the user to edit the worksheet, so unless you can figure out the ways to answer the question to populate the worksheet correctly, you are stuck. The desktop version, however, does allow you to edit the forms directly. As was said by other before, adjusting the "average balance" is the easiest way to have the right values appear.
In fact, if one were doing taxes on paper, this average balance calculation is exactly what would need to be done to enter the information correctly. Unfortunately, TT does not provide an automated way to calculate these balances for refinanced loans correctly.
