Error Related to Mortgage Interest Deduction

We can not see your return, but Return to the Mortgage Interest section and try the instructions below.

1. Open or continue your return.
2. Under Federal tab, Click on Deductions & Credits.
3. Scroll to Mortgage Interest and Refinancing (Form 1098), and Click Update/Edit.
4. Make sure Box 2 (Outstanding Principal) is exactly what is on your 1098 form (e.g., $300,000).
5. Proceed through the screens until you see "Do any of these situations apply to you?" (usually regarding points, seller-paid interest, or co-owners), and Click on "None of these apply" or "No" very deliberately.
6. On the screen regarding the $750,000/$1,000,000 limit, Make sure you Click on "No."

Also... Make sure that you Checked the checkbox that says "The loan is secured by a property of mine.* (If this is unchecked, the program thinks the interest is personal debt (non-deductible) and may generating the "Limit" question as a result of the data mismatch.).

You can also try deleting your 1098 form, and then re-enter it.

Please let us know if this doesn't work, and we will explore other options.

This is often caused by a data entry point that makes the software read your debt as higher than it should be. Here are some things that might be causing it and how you can fix it.

1. Look at your Form 1098 entry in TurboTax.

1. The issue: If Box 2 (Outstanding Mortgage Principal) is left blank or set to "0," TurboTax’s worksheet may miscalculate and assume the limit needs to be entered manually.
2. The Fix: Ensure Box 2 has your actual principal balance (around $300,000). If it’s already there, try deleting the 1098 entirely and re-entering it manually. Do not import it from your bank, as that sometimes carries hidden formatting errors.

2. Since you are using the downloaded software (not the website), you can break the loop instantly:

1. Click Forms in the top right corner.
2. In the list on the left, find the "Tax & Int Wks" (Tax and Interest Worksheet).
3. Look for the Mortgage Interest Limited Smart Worksheet.
4. You can manually check No here. This should clear the error and allow you to e-file.

3. Did you happen to have two 1098s for this same loan (e.g., your mortgage was sold to another servicer mid-year)?

1. TurboTax often adds the principals of both forms together. If it sees two forms with a $300k balance, it thinks you have $600k in debt. If you also have a spouse filing separately or other factors, it might trigger the "limitation" flag.
2. The Fix: If you have two 1098s for the same debt, many experts suggest combining them into one entry. Total the interest, use the year-end principal, and use the original loan's start date.