topic Re: Mortgage Interest Deduction Limits in Deductions & credits

Mortgage Interest Deduction Limits

rlm3 — Thu, 13 Feb 2020 20:38:16 GMT

During Federal Review, I'm being flagged for Limits on my Mortgage Interest Deduction. If have three mortgage loan deductions. The third loan was a complete refinance of the second loan. In the Deduction and Credits section, I answered NO to the limitations question on whether my loans exceeded either the $1M pre-2017 and $750K post 2017 thresh holds. When I went back to the Deductions and Credits section, the program had changed my answer to yes. I answered NO again, but the same thing happed. Is this a flaw in the program? How do I deal with it?

Re: Mortgage Interest Deduction Limits

JohnW222 — Thu, 13 Feb 2020 22:28:18 GMT

There are no known issues with the Mortgage Interest Deduction. Your best bet is to delete the Mortgage Interest data and re-input it.

In TurboTax Online:

Click the Federal tab on the left, then

Click Deductions & Credits, then

Click Your Home, and finally,

Mortgage Interest and Refinancing (Form 1098) Revisit.

Re: Mortgage Interest Deduction Limits

rlm3 — Fri, 14 Feb 2020 18:44:36 GMT

I beg to differ with your answer. After posting my question, I discovered several others that point to my exact issue; including one that points to this issue going back as far as FY18. Care to explain that?

Re: Mortgage Interest Deduction Limits

balegs — Fri, 14 Feb 2020 23:17:29 GMT

I'm having issues with what appears to be a bug when trying to allow deductions on my mortgage. It asks if certain situations apply to me (eg: debt > $1mm and acquired after 12/2017) and I check NO. Then when I save it reverts the answer back to YES. So it wipes out my mortgage interest deductions. I've tried deleting the entries and re-entering. I've also tried putting the mortgage balance at $1 and showing the mortgage had originated in 2000 (way before 2017). So please advise what's happening to the program.

Re: Mortgage Interest Deduction Limits

jake93 — Sat, 15 Feb 2020 18:06:06 GMT

This is definitely as issue. I have the desktop program and have sent my tax file to TT as requested. I have not received any kind of response from TT. There have been 2 workarounds suggested by other users.

The first is to go into the actual form/worksheet and check the “No” box.

The second is to answer the tax limitation question “No”, do not click continue, save the return, back out of the program, reopen the program and manually continue your return at the next step.

I have actually tried both solutions and both cleared all the error checks and were deemed ready to efile. I have successfully efiled using the second work around. My return has been accepted and approved by the IRS and state.
TT definitely needs to fix this problem. I don’t pay for tax software to have it calculate my taxes incorrectly. In my case, the error causes a taxes due amount of over $2500 vs a refund of over $500. Its unacceptable. It is doubly irritating to have TT repeated say “there is no bug”. I guess People can’t rely on TT to “Get your maximum refund, guaranteed”.

Re: Mortgage Interest Deduction Limits

Peter62 — Mon, 17 Feb 2020 21:50:45 GMT

Hello Jake93,

I've also had a this problem but only this year. I'll try your ideas and hopefully this will work! I agree, this is a software bug and should be looked at. As many year users of TT our carryover data is crucial to accurate filing, more than the price of the annual software.

Kind regards

Peter62

Re: Mortgage Interest Deduction Limits

miyamotos — Fri, 21 Feb 2020 13:20:58 GMT

As of today 2/21/20 - TT has NOT fixed this issue. I am running into the same problem. This is a big issue and involves a lot of money!! We do not pay TT to have to 'work arounds' ! Get your act together!! This is a problem!!

Re: Mortgage Interest Deduction Limits

tjucla98 — Sat, 22 Feb 2020 20:24:27 GMT

Hi Miyamotos,

I am also having the same issue. I tried tweeting TurboTax for support and they immediately responded and asked me to use this link to call for support / request a call: https://t.co/5hQt8uKpKX?amp=1

Once they called me back I explained that I researched this issue on the TT boards and found that this is a pretty well known issue and that there will be a bug fix in place by Monday 2/24/2020.

Unfortunately no immediate workaround (not ideal) if you're using TT download for OSx.

Re: Mortgage Interest Deduction Limits

VictoriaD75 — Tue, 25 Feb 2020 01:49:57 GMT

There is a workaround for this.

For desktop versions:

In Forms view, locate and click on Tax & Int Wks on the left from the forms list
On the form, scroll to Mortgage Interest Limited Smart Worksheet
Click on NO to the right of the question, Does your mortgage interest need to be limited

For online versions:

Under Deductions & Credits, expand the menu for Your Home
Click Start/Revisit next to Mortgage Interest and Refinancing (Form 1098)
Click through until you get to a screen that says Do any of these situations apply to you? Mark Yes.
On the next screen, take out the zero.
Click back and choose No.

Re: Mortgage Interest Deduction Limits

kristenn04 — Wed, 26 Feb 2020 20:11:34 GMT

Today is 2/26/20. Still no solution. I am having the same issue after entering a refinanced loan. This is clearly a problem. I think it is adding all of the loans together somehow. One question I did have when entering the 1098 forms is how to answer the question: is this loan refinanced or the original loan ? I had 3 "original loans" (one of my original 2 was sold to a different lender prior to my refi), so I selected "original loan for the first 3, then "refi" for the newest loan. Wonder if that is messing things up? Should I have selected differently? Everything I've seen says I did it right, but it makes me wonder. Somewhat happy to hear I'm not the only one having this problem this year, but wish they would fix the bug.

Re: Mortgage Interest Deduction Limits

VictoriaD75 — Fri, 28 Feb 2020 04:57:56 GMT

Have you tried the workaround list above? What version of the software are you using?

Re: Mortgage Interest Deduction Limits

Anonymous — Fri, 28 Feb 2020 20:17:25 GMT

I agree. I am having the same problem after having deleted and re-entered the deductions three times. It appears that the program is adding the original loan and the refinanced loan amounts making it a requirement for the limitation due to an excessive of $750,000 loan amount,. When is this going to be corrected?

Re: Mortgage Interest Deduction Limits

Anonymous — Fri, 28 Feb 2020 20:18:50 GMT

Thank you. Great idea. I am going to try it.

Re: Mortgage Interest Deduction Limits

KrisD15 — Fri, 28 Feb 2020 22:43:14 GMT

Do not alter the 1098. Enter the 1098(s) as reported. Box 2 should not be blank. Box 2 is the balance of the loan on 01-01-2019 OR the balance on the day the loan was taken out in 2019. Answer the interview questions carefully.

If you get an error concerning the balance, please follow these directions:

ONLINE USERS:

Please go back to the Home Mortgage Interest section:

Click Federal on the left side-bar

Click Deductions & Credits along the top

Scroll down to “Mortgage Interest and Refinancing (Form 1098)” Click Edit/Add

Scroll down the “Here’s your 1098 info” screen and click Done.

Next screen asks “Do any of these situations apply to you?” Select “Yes, one or all of these situations apply to me.” and Continue.

On the following screen, you will see the “Original amount”.

Enter the amount you can claim as a Home Mortgage Interest deduction in the “Adjusted amount” box. The Adjusted amount cannot be larger than the original amount or you will receive an error when trying to file. Instructions on who needs to adjust interest and how to calculate are available by clicking the blue “Help me figure this out” link.

DESKTOP USERS:

Go into Forms (top right)
Enter the amount on Tax & Int Wks
Mortgage Interest Limited Smart Worksheet section
Line A2

Step by Step

Federal

Deductions & Credits

Mortgage Interest, Refinancing and Insurance Click Update

Click Done

Click Yes, one or both of these situations apply to me. And Continue

Enter the Adjusted amount and Continue

Re: Mortgage Interest Deduction Limits

mec405 — Sun, 01 Mar 2020 22:03:42 GMT

To Jake93-

After spending almost 2 hours on the phone with TT I decided to google and found you fix.

Thank you-yours worked.

Re: Mortgage Interest Deduction Limits

Flysouth — Wed, 04 Mar 2020 19:32:12 GMT

I have the same exact issue (4 1098s for the same mortgage for 2019) and TurboTax has calculated 3 different refund amounts when I used the workarounds here. I'm VERY concerned that TurboTax is not calculating things correctly.

How is it possible that SAME input results in three DIFFERENT results?

TurboTax - time to actually provide a meaningful response to this.

Re: Mortgage Interest Deduction Limits

KrisD15 — Fri, 06 Mar 2020 20:28:13 GMT

I have included a link to IRS Pub 936 if you would like to read why the interest can be computed at different amounts because of the many different factors that go into calculating it. It is helpful to understand the requirements. The questions the program asks may make more sense to you after reading the publication.

The interest may be limited by the amount of acquisition debt. The 1098 forms do not cover that in detail, therefore the answers to the interview questions are also needed.

If you use the instructions I posted above (not a work-around) you are adjusting the interest yourself. This would be done in a situation where the 1098 and interview questions do not provide enough information for the program to make the final calculation.

This is caused by the many stipulations the IRS has placed on the requirement to claim the home mortgage interest from 2018 going forward.

IRS Pub 936

Re: Mortgage Interest Deduction Limits

NCperson — Fri, 06 Mar 2020 22:00:46 GMT

do you have 4 1098's because the mortgage was sold multiple times. In other words, you have the same mortgage on January 1 as you did on Dec 31 with no refinances. If so, I'd just make believe it's one 1098 and input the data as such.

what TT is testing for is whether you mortgage exceeds $750,00 and whether all the debt is considered 'acquisition' debt. None of that matters if the reason for the multiple 1098's is that the servicing was sold over and over again.

Re: Mortgage Interest Deduction Limits

dankey2003 — Sun, 08 Mar 2020 18:24:59 GMT

This work around works - thank you!!!

I sold a home and bought a new home - both mortgages qualify and are below the threshold.

My guess is that TT is adding the two mortgages for us which is more than the limit and defaulting to "YES" based on the added mortgages

Re: Mortgage Interest Deduction Limits

JK20201 — Mon, 16 Mar 2020 05:16:31 GMT

For the second year in a row, turobtax incorrectly added an equity line to my mortgage interest deduction calculation and allowed for a full deduction of mortgage interest. The IRS flagged my 2018 return as a result, and it's now being audited. While preparing the 2019 return, I encountered the same issue. I had to manually adjust my entries in the mortgage interest worksheet. Turbotax added an equity line maximum balance of $100K and summed up the maximum for home mortgage and an equity line to $1,100,000, then fully deducted mortgage interest. I do not have an equity line and didn't enter one. Why does this keep happening?