Something's still awry (albeit differently) with the Ded Home Mort worksheet, at least for a refi subject to the $1m limit applicable to my loan, whose origin was back in 2017. (The same problem may occur for post-2017 loans subject to the $750k limit, but I don't have one of those.)
- The worksheet flags "name shown on return" as incomplete, even though that's copied automatically from the return.
- I have two 1098s from a 2021 refi, no cash out. The worksheet copies the info from the more recent loan as "Loan 1" in part 1, but it omits the older (refinanced) loan.
- Line 16 in worksheet therefore calculates the limited interest using only the newer loan.
- Line 17 then lists the total interest from the older (refinanced) loan, as though the interest on that loan were not limited. That would be nice, of course, but it's not correct--the older loan's data should appear as "Loan 2" in Part 1, and therefore carry through to lines 12, 13, and therefore 16. Line 17 should be 0.
- If I override the entries in Lines 12 and 13, using the average-balance calculation specified in Pub 936, then the rest of the calculations are correct, and carry through properly to the California return. (Presumably I could get the same result by using overrides to populate "Loan 2" correctly.)
TurboTax's standard solution to this is to enter the data from a refi in a single, consolidate 1098. That yields the correct result, but it means that the TT return's 1098s won't match what's submitted to the IRS by the lender. TT should not be advising taxpayers to change what's reported to the IRS.
