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Deductions & credits

The Mortgage Interest Worksheet is causing errors because the Box 2 Outstanding Mortgage Principal amounts on Form 1098 are adding up to more than $750,000. This is lowering the deduction that you may be eligible for if you are itemizing deductions because the finalized worksheet is not estimated to be available until February 17, 2022.

 

For more information on the limit to mortgage interest deductibility, see IRS Publication 936. Since you did not carry the new mortgage for the entire year, you can calculate the average mortgage balance using the method prescribed in the IRS Publication, but the finalized worksheet should do that automatically. You will need to enter the loan balance on January 1, 2022, and make sure you enter the loan origination date in box 3. If you do not still own the home of the first mortgage, you will need to know the sale date and the amount of principal still owed on that date.