Deductions & credits

You should enter your 1098 data exactly as shown on the form. When you are done entering your deductions, you should get the 'Your deduction is being limited' screen. This is where Turbo Tax will display the amount of deductible interest it calculated and give you the option to enter your value.

 

You should be using the 'Statements provided by your lender' method on page 12 of Pub 936. Using the numbers from your spreadsheet: Add up the ending balances from your statement and divide by 12 to get the average balance (9,980,000/12 = 831,667). Apply the limit to the average (750,000/831,667 = 90.2%). Total deductible interest = 46,700 * 90.2% = 42,123. Your method of calculation is not supported by Pub 936 but you are arriving at essentially the same result. 

 

From your spreadsheet, it looks like you are using the starting balance for each month. For the 'Statements provided by your lender' average, you have to use the ending balance. Shift your monthly balances up one month, dropping the Dec 2023 balance and interest and adding Dec 2024 balance and interest. The will have little effect on the result.

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