topic Confusing terminology for Mortgage 1098 Refinance in Get your taxes done using TurboTax

Confusing terminology for Mortgage 1098 Refinance

Eroc1234 — Fri, 26 Feb 2021 22:29:47 GMT

I refinanced this year and I am finding the TT terminology very confusing. I received 2 mortgage interest1098s, one from my original loan which I refinanced (paid off), and one from my new mortgage company.

TT asks "Is this the original loan you took out to purchase the property?"

The two choices below are:

"Yes, this is the original loan I used to buy or build my home"

"No, this is a HELOC or a loan thats been refinanced"

The problem is these answers don't make sense. This is my original loan AND its also a loan thats been refinanced so really both are applicable for my original loan. Then really neither of them are applicable to my new loan. So am I supposed to select its a refinanced loan for the old loan or the new loan?

Thanks!

Re: Confusing terminology for Mortgage 1098 Refinance

DMarkM1 — Tue, 02 Mar 2021 19:13:21 GMT

First, to ensure the correct entry you should delete all forms 1098 from TurboTax to start fresh with this section. Be sure to continue through the interview and "Wrap Up Tax Breaks" to trigger the updates.

Then, enter the 1098 for the oldest loan first. You will answer "Yes" this is the original loan and later you will answer "Yes" you did payoff/refinance this loan with another lender in 2020.

Next enter the 1098 for the next loan. You will answer "No, this is a refinance and later you will answer "No, you did not payoff/refinance this loan with another lender in 2020.

Again be sure to continue the interview and "Wrap Up Tax Breaks" to trigger the updates.

Re: Confusing terminology for Mortgage 1098 Refinance

Eroc1234 — Fri, 05 Mar 2021 21:51:59 GMT

Hello, I appreciate the response. I followed all of your instructions (including deleting 1098s and wrapping up tax breaks) but still did NOT get prompted with the following: "Yes" you did payoff/refinance this loan with another lender in 2020 for the original loan. The only place I see that option was for my NEW loan where you input "This is a new loan which I paid points" which obviously isn't pertinent to the original loan.

Any other suggestions?

Thanks!

Re: Confusing terminology for Mortgage 1098 Refinance

JamesG1 — Sun, 07 Mar 2021 16:39:43 GMT

@Eroc1234

Perhaps the steps below would be helpful.

In TurboTax Online Deluxe, I was able to enter a home loan on an IRS form 1098 and the second IRS form 1098 for the refinanced loan. For the refinanced loan, I used the balance of the loan at the time of loan pay-off.

I was given the full mortgage interest deduction and the Home Mortgage Interest Limitation Worksheet did not add the two mortgage balances together.

The entries were made at Federal / Deductions & Credits / Mortgage Interest (Form 1098).

Entries for the original loan

Do any of these uncommon situations, I entered None of these apply.

Did you pay points, I entered I’ve already deducted.

Was this loan paid off or refinanced, I entered Yes.

Is this loan a home equity, I entered No, this is the original loan.

Entries for the second loan

Do any of these uncommon situations, I entered None of these apply.

Did you pay points, I entered I didn’t pay points.

Was this loan paid off or refinanced, I entered No.

Is this loan a home equity, I entered Yes, this is a loan I’ve refinanced.

So what type of loan is it? I entered A mortgage loan that I’ve refinanced.

Have you ever pulled cash? I entered No.

Re: Confusing terminology for Mortgage 1098 Refinance

fanfare — Sun, 07 Mar 2021 17:14:04 GMT

@Eroc1234

only one loan can be the loan you took to purchase the property.

therefore for any other loan, the answer must be No.