Deductions & credits

This is making me nuts! I went back and went through the steps I said worked and got the same nonsense you did. The mortgage worksheet always has the 'Is this a refinance of a previous loan' box checked no matter how many times I go back and check the HELOC box. Turbo Tax is not asking the right questions for a HELOC, especially one that starts off with a $0 balance and has a draw and payoff ending with a $0 balance.

 

My advice is to first check with the finance company that issued the 1098 and ask them about the entry in Box 2. Maybe they will issue a corrected 1098 with a value other than $0. If not, my advice is to go back to my original suggestion. When entering the 1098 for your HELOC, enter a value in Box 2 for the Outstanding Balance. This could be the amount of your initial draw or the total of draws made in 2023. You won't have to say the loan was paid off in 2023 and all of your interest will be treated as non-acquisition interest and not show up on Schedule A. Note if your state is like mine, California, you will get a $59 non-acquisition interest deduction. This is the most realistic and honest way to handle this.