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posted Jul 11, 2020 7:18:03 PM

How do I enter 2 1098s for the same mortgage? TurboTax is saying the 2nd one needs review in red. My loan was sold on 4/1/2019.

Ditech sold my mortgage to NewRez.  Box 2 on the Ditech 1098 has a number but on the NewRez one it doesn't; NewRez loan didn't exist on 1/1/19.  TurboTax is not adding in the NewRez one, so I'm not getting the deduction correctly.  Says it needs review.  What am I doing wrong?

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Employee Tax Expert
Jul 14, 2020 5:07:09 PM

Try the following:

  1. Log into TurboTax 
  2. Go to the federal section and choose Deductions & Credits
  3. On the page “Your tax breaks”, select Mortgage Interest and Refinancing (Form 1098) and Start
  4. Delete any Forms 1098-MTGE you have already entered in the program. Then choose the button “Add a 1098”. 
  5. Enter the details from your FIRST Form 1098 – the one from your old mortgage company or before the refinance occurred. Be certain to enter all the information, including the amount in Box 2 of your 1098. According to the updated 2019 instructions for Form 1098, Box 2 should show an amount. For a loan prior to 01/01/19, the amount should be the balance of your loan as of 01/01/19. For the loan taken out in 2019 (including refinance loan or when the loan is sold to another mortgage company), the balance should be as of the date of the loan origination.
  6. Continue through the interview until you reach the screen “Was this loan paid off or refinanced with a different lender in 2019?” If you’re entering the original loan, say No. 
  7. On the screen “Is this loan a home equity line of credit or a loan you’ve ever refinanced”, say No
  8. Continue to complete the first 1098. 
  9. Add your next 1098. Be certain to enter all the information, including the amount in Box 2 of your 1098. If there is not an amount in this box, please contact your mortgage lender for the amount. It is required for an accurate calculation
  10. When you reach the screen “Is this loan a home equity line of credit or a loan you've ever refinanced?” say Yes. Select the correct radio buttons and Continue to complete the interview.
  11. Click Done. If presented with a followup question about the interest limitation and your loan balance is under $750,000 then your deduction is not limited - say No. If your loan is over $750,000 then the deduction is limited. Say Yes. You will need to manually calculate the adjustment. Please see Page 12 of IRS Pub. 936 for a worksheet that will help you calculate the amount.