1098

[Stryker15]

I have received two 1098s: one for the construction loan, and the other for the permanent mortgage loan that it was converted into after the house was finished. 

How do I add these for my tax return?

The "Outstanding Mortgage Principal Amount" for the construction loan is a little less than that for the permanent mortgage loan.

[DaveF1006]

According to turbo tax, here is the way to enter these forms. If you have multiple 1098 mortgage forms, you’ll enter them one at a time. After going through the steps with the first one, you can add a lender when you get to the Mortgage deduction summary screen. in your case, I would enter the 1098 regarding the contstruction loan first and then add the 1098 for the permanent loan. 

But, if they're both from the same lender, and one of them has the “Corrected” checkbox marked at the top, enter the corrected 1098 and discard or shred the other one.

[Rechelle2020]

Make sure you don't efile until you have successfully gotten TurboTax to calculate your loans as subsequent loans! I made the mistake of e-filing my 1040 and then realizing the questions TT leads you through on Mortgage Interest for multiple 1098s is completely insufficient for subsequent loans like a construction loan refinanced into a conventional loan in the same year!! 

I found the errors after the fact, and made the corrections by going directly to the mortgage interest forms, but now I have a huge mess because apparently I won't be able to "amend" my e-filed 1040 through TurboTax unless I return all of the data to what was originally reported to the IRS. 

If you have not yet filed, I would suggest opening the Forms and entering the information directly on the worksheet. 

You will want to enter $0 for the outstanding balance of the construction loan, since it was paid off by the new loan (even though it shows the final balance on your 1098). I entered the same date for payoff of first loan and origination date of my current loan and the $0 outstanding balance on the construction loan, and all of a sudden I'm getting a refund instead of owing, and a bunch of other forms are affected by this difference. They don't adjust after you have already e-filed as in my case. So I hope you are able to get this fixed before filing your Federal tax return.

I read other posts where many people are very frustrated by this problem in the automatic entry Turbo Tax does for multiple 1098s. It has been a problem since last year, evidently, and still hasn't been fixed.

[Stryker15]

Thanks for your guidance! 

So I entered the current mortgage loan information into Turbotax matching exactly what is stated on its 1098 form.

For the construction loan:

- I wrote "$0" for outstanding mortgage principal in Box 2

- used the older construction loan mortgage origination date in Box 3

- check Box 7 like it shows on the 1098

- Answered "yes" to the question: was this loan paid off or refinanced with a different lender in2020

The refund went up to reflect the deduction for the interest I paid during the construction phase.

Is that what you were saying you would have done if you could go back?

[Rechelle2020]

Yes, for sure, but Turbo Tax has done an update where they are not allowing that any more. They are forcing taxpayers to use a calculator to combine the total interest of each SUBSEQUENT loan (this does not apply for changing loan service entities - in other words, the loan being "sold"), and then they are saying enter from original loan for certain lines. It's ridiculous. Then next year all the people who follow those instructions are going to have wrong information on their previous tax return that gets populated into the new year...

I'm so glad it worked for you and you were able to do it Before E-Filing, and Before TT decided to force everyone into this convoluted way of entering the information for one of the most important - if not the most important - deduction on the Schedule A.