CA Home Mortgage Loan Information Refinanced

[kamal444]

Hi,

I had a home in CA which I purchased in 2017. I refinanced the loan in June 2020. The purchase and refinanced amounts are less than $540K.

I received two 1098 form from Bank A and B.

Total Interest paid to Bank A [JP Morgan Chase] (originating) : $10,484  

Total Interest paid to Bank B [Censlar Bank] (new loan) : $6,547

For the federal return, it calculates the total interest as ~$17K, which is correct.

For Bank A 1098 form, I answered the questions correctly that this loan was refinanced and nothing was taken out.

When we move to the CA state tax filing (see attached), it shows California Home Mortgage Loan Balance Information and puts in the value for both the loans. I entered the ending balance correctly, Bank A as 0 and Bank B as present in 1098. However, it calculates more refund when i entered these values.

a) I am not sure if TurboTax is considering these as 2 separate loans for CA state tax

b) Why was there more refund from CA state tax when I entered the entered ending balance. The refund increase by about $100

Am I missing something here, or is the workflow correct?

[DaveF1006]

Do this. Combine both 1098's into one. Use the latest loan balance amount as the mortgage loan outstanding and combine the mortgage interest amounts. See if that will make a difference because the calculations will be correct despite the difference in the reporting.

[kamal444]

Thanks @DaveF1006 . I tried with both methods, by adding both the 1098 together and separating them out. For both methods, the refund comes out to be the same. So, I will plan to keep them separately. Thanks for the advice, I should have figured this out.