First keep in mind a loan sold to another servicer is the same loan. With that in mind follow these steps to delete all the 1098 entries and start fresh.
- "Deductions and Credits"
- "Mortgage Interest and Refinancing" "Edit/Add"
- Delete each of the form 1098s
- Continue
- Scroll to "Your Home"
- Revisit the Mortgage Interest topic
- Yes and Continue
- Change how I enter my form
- Type it myself
- Enter the first lender (oldest) name
- None apply
- Enter the form 1098 information for the oldest loan
- Primary Home (Assuming it is)
- Select you have no points to deduct on this loan (You will enter the points on the most current loan)
- Is this the most recent "NO"
- Since this one is a refinance or Home Equity then select "Refinance"
- Did you use the loan for anything for other than pay off existing? The answer should be "NO" since you are amortizing points indicating the loan was used to refinance only.
- Continue
- Add another 1098
- Change how I enter my form
- Type it myself
- Enter the second lender name
- None apply
- Enter the form info. NOTE: Box 3 should be the same date as the first (original) loan 1098 and box 11 should be the date the new servicer acquired the loan.
- Primary Home or same choice as prior loan as applicable
- Select the "I paid points..." option.
- Enter the loan info for the points (The points entered are from your original loan docs and will be automatically prorated over the months on the loan).
- DO NOT check the box indicating you refinanced or paid off the loan
- Is this the most recent? "Yes"
- Since this loan is the same as the prior it is a refinance then select "Refinance"
- Did you use the loan for anything for other than pay off existing? Assuming the answer is "NO"
- Continue
This should now show a full deduction including prorated points.
Q.1 Have you used the money from this loan exclusively on this home?
This applies to the entire lifespan of the loan, and includes improvements or mortgage payments made on the property that secure the loan.
- Yes, I’ve used this loan only on the home I took it out on
- No, I used some or all of this loan on a diff home
Since you are amortizing points that would indicate you answer "Refinance" and "NO" you did not use on something else.
Q.2 Since you’ve used money from this loan for things not related to the property it’s secured by, you can’t deduct
If you answer "NO" to question about use of the loan you will not get this question.
Q.3 What is the balance of your loan on 12/31/2022
If you answer "NO" to question about use of the loan you will not get this question.
Q.4 In both 1098 worksheet, TT asked ‘was this loan a result of a refinancing a previous loan’ and gave me errors
Errors should clear with the above entries.
Q.5 1st 1098 was a refinance so I still need to spread the points for the next 12 yrs. Yes, the loan sold to another servicer will continue to be prorated the same as the original loan.
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