This seems to be a recurring problem every year with TurboTax and I have seen too many different responses, merge the two 1098 forms, no don't do it because IRS has 2 different ones submitted by the lenders, move the points to the most recent 1098, and other combinations...
Can we get some guidance from TurboTax on how to get it to calculate the correct deduction amount?
- Using TurboTax Premier MacOS version
- Married Filing jointly, so 750K limit.
- Loan sold to another lender within 2023 and before first mortgage payment was made
- Original Lender, one used at closing, 1098:
- Box 1: Interest paid shows here the amount paid during closing. Prepaid interest as it closed in the middle of the month.
- Box 2: Original Loan, USD 1.01M
- Box 3: Correct origination date. Mid September 2023
- Box 6: Amount of points paid to close the loan (discount points)
- Second Lender, who bought the Loan, 1098:
- Box 1: Interest paid shows the correct amount, only two months of payments.
- Box 2: Original Loan, USD 1.01M
- Box 3: Correct origination date. Mid September 2023
- Box 6: No points
- Box 10: State taxes paid.
- Box 11: Date the loan was acquired by this lender from the original lender.
The system correctly calculates the limitation percentage (0.736) since the mortgage is above 1M but the software only transfers the interest and points (times the percentage limit) from the second form 1098, it misses the interest and points from the first one which drastically reduces my deduction as points were a big chunk of my 2023 interest+points paid.
The only way I have managed to seemly do the calculation correctly is if I merge both 1098 forms into one, and only enter one in TurboTax. While this has been suggested in some responses to similar questions, there are also other responses saying this should not be done as the IRS expects two 1098 forms to be entered.
What is the correct answer? When e-filing does the individual 1098 information get transferred or is it only the Schedule A, in which case merging would not be an issue.
