Hi, KingRebecca.
I'm dealing with this, too, for the last 5 days. I have the desktop version of TurboTax, and you CAN edit the average balances. To modify the value of a calculated field, you have to right-click in the field and select "Override", and then you can type in the correct number. If for some reason you change your mind, right click again and select "Cancel override". Or you can hit ctrl-D, which toggles between overriding and using the default value.
Fixing the average balances works for my California return (which is where I first realized that yes, I have this problem, too). However, the Federal return is still not letting me deduct my points. I had a refinance with cash out and points, followed by an immediate sale of the new loan. It appears that there are (at least) two bugs in this section of the tax deductions:
1. When there are multiple loans during a single tax year, including at least one refinance where both loans are not outstanding at the same time, the software is adding their average balances rather than averaging them with a weighted average based on the number of months that each loan is outstanding. The work-around of multiplying the calculated average by the number of months the loan was outstanding and then dividing by 12, works. I feel for the online users who don't have this option.
2. When there is a refinance with cash out and points, despite answering all of the interview questions and all of the questions on the 1098 worksheet to indicate that all of the cash out was used to buy, build, or substantially improve the home, that information is being ignored and the loan is being treated as a home equity loan and points are being treated as not deductible. I'm still looking for a work-around (or a worksheet question I've missed) for this one.
