Home Mortgage Interest Deduction

Forum|Forum|5 years ago
February 12, 2021
2 replies
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After completing the mortgage interest deduction, Turbo Tax indicated that I would have deduction of $27,273. This is less that the interest I paid, probably because the total mortgages exceed the $750,000 limit. I worked through the form 936 and came up with a similar number. However, when I checked Schedule A, TurboTax had entered $33,357, which is the total interest I paid rather than the $27,273 indicated by TurboTax in the mortgage interest calculation. Seems like an error in TurboTax

linaj20201

Level 14

If you have more than one 1098 form, I will recommend you to combine all 1098 forms and enter as one. I am attaching a TurboTax link for the instructions. Click here:

Multiple Form 1098s

For tax years prior to 2018, your mortgage interest deduction is generally limited if all mortgages used to buy, construct, or improve your first home (and second home if applicable) total more than $1 million ($500,000 if you use married filing separately status). Beginning in 2018, this limit is lowered to $750,000. For more information about the mortgage interest deductions, click here: Mortgage Interest deduction

suttonm11

Level 3

This really needs to be fixed by TT. I'm very disappointed.

I've spent over 2 hours now trying to figure out the correct way to enter 3x 1098s:

- paid interest up to April on my old house. Sold that one in April (1098 from 1 lender)

- bought a new place in April (1098 from 2nd lender)

- refinanced in December 2020 (1098 from 3rd lender)

There is ZERO help I can find on how to enter 2x 1098 for a house sold and one purchased. If I enter the box 2 amount from both 1098s (old and new property) it restricts the interest deduction as it thinks the total mortgage was >750k. If I enter zero, I get an error message (zero value not allowed).

How in Charlie heck do I enter this correctly ?!

Gonna post this question separately...hope someone replies

crolann

Level 2

I, too, am having issues with the deductible home mortgage interest. I am limited because mortgage debt is over $750k. At this point, TT is calculating the correct limited amount of home mortgage interest, but does not carry the amount over to the Schedule A. Also, it does not include the "Deductible Home Mortgage Interest Worksheet" with the printed return. I can override the amount on Schedule A, but I get a warning that there is an error and cannot be E-filed. It seems that the solution is on the "tax and interest worksheet" where it asks of "Does your mortgage interest need to be limited?" "yes" box and "no" box. Even though TT calculated the limited amount of intersest, the "no" box is calculated and checked. The "no" box cannot be overridden or deleted, nor can the "yes" box be checked or overridden. I have spoke to 9 different TT support staff and it seems to me that I am the only preparer that is having this problem. HELP!

Cynthiad66

Level 14

You are not the only preparer having this problem. There is a known problem with Home Mortgage Deduction. TurboTax is working to fix the problem and the many other issues. There are many changes due to the CARES Act that require software upgrades. We have not been given an expected date for the fix yet. Please check back often to see if you can file your return.

In the meantime, you can try this work around. You did not provide the details of your Mortgage situation and therefore I am giving you a general work around that might help. Please try this.

If there is a refi and there was an outstanding mortgage principal listed in both of them on Line 2 on the 1098. When you do put an outstanding balance in both forms, then the program adds them together and if that number is greater than $750k, then it puts you in the category to "limit interest". To get that to go away, you need to go back to the deductions section and click on "edit" mortgage interest statement. Change the line 2 of the mortgage that you no longer owe on (like the one that you refinanced and paid off) to a 0 (zero) because you have refinanced out of that loan and no longer have an "outstanding mortgage principal". Once you change one of them to zero (the one that was paid off by the refinance) then it should no longer pop up with that error at the end when you go to file.

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crolann

Level 2

Thank you for your encouragement that there is a light at the end of the tunnel. I was beginning to think that I was going to have to buy new software to get a correct tax return. As for the specifics, I have two mortgages. The same mortgages as last year. No refinances. One is prior to Dec, 2017. The other is May, 2018. The average balance is over $1M combined. At first TT was allowing all interest. Then after a major update, TT calculated the limited mortgage interest allowed, but did not carry it to the Schedule A. Overriding the allowable amount only caused errors and did not produce the "Deductible Home Mortgage Interest Worksheet" as evidence to "Keep for your records". Once again, thank you. Fingers crossed that this is remedied soon.