Major Error: Mortgage Interest Limitation Incorrect

Forum|Forum|2 years ago
August 29, 2023
3 replies
1 view

As you all know, the mortgage interest deduction is limited to $750k for some mortgages, depending on the date. TurboTax (both the Mac desktop and Online versions) are incorrectly using the unlimited amount on the Schedule A box 8a, instead of the limited amount. I checked the Deductible Home Mortgage Interest Worksheet on the Mac Desktop version and saw that it was doing the calculation correctly, but this did not get transferred to the Schedule A in either version. I contacted TurboTax and they connected me with two different CPAs who confirmed the issue. You can see the problem in the attached images.

My concern is: 1) someone else might not have noticed and submitted their taxes with the wrong amount; 2) what is the cleanest way to submit? I guess I could create a fake 1098 with the limited amount as the full amount.

I recorded a video of both the desktop and online versions, but I cannot share it here.

TurboTax Premier Online

fanfare

Level 15

If you find the TurboTax calculation is incorrect ( as is often reported here),

follow the instructions in IRS PUB 936

and enter the results on your tax return Schedule A.

@sloan1919

sloan1919Author

Level 2

You can’t. At least not directly. I can confirm that on both the online and the Mac desktop versions the schedule A 8a box is NOT an editable field. Hence why I mentioned creating a fake 1098 which is where it is pulling the incorrect values from. Also, I obviously know about the guidance in 936 or else I wouldn’t have known the calculation was wrong.

Furthermore, as I stated in my post, TT is doing the calculation correctly they just have the wrong fields mapped together. So schedule A 8a should also (unless overridden) be the same as 22 on the worksheet. They are likely pulling 14 instead.

@fanfare

fanfare

Level 15

yes you have to use your own simplified 1098 to get the proper amount on Schedule A.

Even if TurboTax knows about the problem you can't assume it will be fixed by Oct 15th.

@sloan1919

Jcbbmine

Level 2

I have encounter the same problem. And what bothers me is the California return; as California allows principal up to 1m. Form540 calculation looks super wrong even though the final number is correct (I enter the correct number myself) I believe form 540 is submitted to California tax bosrd

Jcbbmine

Level 2

Nvm worksheet is probably not submitted. Anyways, the error is very annoying, I will probably submit refund for turbo tax, wasting so much of my time.

Jcbbmine

Level 2

Another thing, if one enters property tax for rental property under deduction and also claim schedule E; turbo tax will still count rental property property tax deduction under SALT even though I have listed it as non primary nor secondary. TurboTax so bad….

sloan1919Author

Level 2

For those following along at home. TurboTax sent out this email today 12/05/2023. Keep in mind, the first Turbo Tax "CPA" said I was imagining this. 🙄

Hi Ray,

We’re contacting you because there might be an issue with the accuracy of your 2022 tax return. Due to an error, TurboTax wasn't limiting the mortgage interest deduction on Schedule A. Instead, the program allowed the full deduction for the mortgage interest. As a result, some customers might have underpaid their federal and, if applicable, state taxes.

We understand that finding out you might owe more taxes isn't good news, and we want to make things right. Once you amend your tax return, we’ll refund the entire cost of your federal and, if applicable, state TurboTax product.* No need to call and request the refund. We will be notified when your amendment is filed, at which point we will process the refund.

To amend your tax return, please follow the steps detailed in this article: How do I amend my 2022 tax return to correct my mortgage interest deduction?

Please note, the processing of your amended federal tax return will be delayed due to the IRS e-file shutdown. The last day to e-file your amended federal tax return was November 15, 2023. The IRS will resume accepting e-file returns late January 2024.

TurboTax experts are available to answer your questions at [phone number removed] (Monday–Friday, 5 AM to 5 PM PT). When you speak with an expert, just mention 2022 Mortgage Interest Limitation so they know exactly what you’re calling about.

As a part of our 100% Accurate Calculation Guarantee, TurboTax will also reimburse you for any penalties and interest you’re assessed because of this error.**

We truly apologize for any inconvenience this might have caused and want to thank you for being part of the TurboTax family.

Warm regards,

The TurboTax Team