You may be able to tax a deduction on your state return. The only place to enter the 1098 is in the federal section. If you enter in the federal section and you take the standard deduction, TurboTax won't use the 1098 when preparing your federal tax return (Form 1040). Some states make you use the same deduction as you used on your federal return but some state let you itemize on your state return even if you took the standard deduction on your federal return. If your state allows you to itemize (or if they have some kind of separate homestead credit), TurboTax will use the information from your federal return, including the 1098 you entered.
So, yes, if you can use it on your state return, enter it on the federal and TurboTax will include it when you do the state tax form preparation. It is not going to hurt anything to enter the 1098, and if you do, it will be available for use on your state return and won't require any additional data entry. Where do I enter my 1098 mortgage interest statement?
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