This is not a special situation. It is a serious miscalculation of the Turbo Tax software. One that should be a simple fix with the information already entered and yet is completely ignored by Turbo Tax. Table 1 of Pub 936 requires the average balances be used to figure the acquisition debt limitations for 1) Balances in excess of $1,000,000 or $750,000 and 2) mixed used mortgages consisting of acquisition and non-acquisition debt (equity debt in Pub 936). The only mortgage situation that doesn't require Table 1 is one that consists entirely of acquisition or grandfathered debt and the balance is below the limitations at all times during the year.
Again, Turbo Tax uses the ending balances instead of the average balances to calculate the percentage of interest to deduct on 1040 Schedule A. There is no situation in Pub 936 that allows this and no reasonable explanation for why Turbo Tax does it this way. I am convinced it is a software bug.
I went back into my return on Turbo Tax (Online) to look for the option to enter my own values and did not see the one that you described. However, on the page for entering Form 1098, the little help button next to box 1 explains that all interest is not deductible and suggests the user calculate the amount that is deducible in Box 1 and enter an explanation for entering a value that differs from the Form 1098 value. This is unacceptable and it doesn't work. Turbo Tax uses the value entered as the total interest paid in it's calculations that are already incorrect. The help message is misleading and produces erroneous results.
By switching to the download version of Turbo Tax, you are suggesting I pay for a product that I have already paid for online to manually manipulate faulty Turbo Tax calculations in the worksheets. Seriously?
