Adding more interest expense

Forum|Forum|2 years ago
February 26, 2024
1 reply
15 views

I understand that interest (1098) is limited based on when you took out your loan as well as the amount of the loan. If I enter more 1098 to my primary home, how can my total refund reduce? It should at least stay the same and the system just not allow any more interest deductions. But I noticed adding another interest deduction reduced the refund. That does not make any sense.

JulieS

Level 15

Yes, in general adding additional tax deductions usually increases a refund, or doesn't change it.

First of all, please doublecheck to make sure that is a refund and not a balance due showing.

If your additional deductions are tax preference items, they may increase your tax if they are triggering Alternative Minimum Tax (AMT).

For AMT, only home acquisition debt is deductible. Unlike the general rules, you can't deduct older home equity debt from before 2018. Follow this link for more about AMT.

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jyeh74Author

Level 6

@JulieS I only had 1098 for primary. It showed a refund. Then I added 1098 for HELOC on primary.

This is a weird phenomenon. I have two 1098.

Primary = $10k interest, Heloc = $2k interest

I get a refund.

If I delete both out, and first add the Heloc = $2k interest, then add the primary = $10k interest, it will give me a lesser refund.

If I delete both out, and first add the primary = $10k interest, then add the Heloc = $2k interest, it will give me a higher refund.

I am not changing the information. Just the order in which it is entered under Deductions and Credits under Your Home. Why is this happening?

MarilynG

Level 15

It shouldn't make a difference in what order you enter your 1098's for Mortgage Interest. However, make sure for the HELOC, that you indicate it is a HELOC, and what amount of the proceeds was used on the home.

Sometimes the Refund Meter is strange, so if you are seeing these results immediately after your entries, keep going through your return items, the number may change again, possibly when you finish the Deductions & Credits section, and move to the next section.

Here's more info on Deducting Mortgage Interest.

@jyeh74

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