I am having the exact problem on a refinance. I have followed the recommendations of other users about sequencing the 1098’s and indicating that the first loan is paid off, to no avail. The only thing that worked close to the way it should work (total principal is the higher of the new and paid off loans) was to enter 0 for the principal of the lower (paid off, in my case) loan in box 2 of that 1098. I know this entry is incorrect, but it back-engineers an answer that’s approximately correct. I really hope TurboTax fixes this bug. I have not been able to find a location on the website to provide this feedback, so hopefully someone at TurboTax is monitoring these questions.
