Deductible Home Mortgage Interest Worksheet

[jmc916]

During the review process the Deductible Home Mortgage Interest Worksheet (Schedule A) was flagged. It showed the following error: "Deductible Home Mortgage Interest Wks: This form has not been finalized for returns with two or more mortgages and limited mortgage interest. We expect this form to be available after February 17." Does this mean we have to wait until after February 17th to file, or did I make a mistake while entering the 1098 forms? 

For background info; I have three 1098 forms that I have entered for the single home that I own. First 1098 is from original lender, they sold the loan so there's a 1098 from the second lender. Then, we also re-financed in 2021 so there is a 1098 from the new lender.

Any help is appreciated! 

[AliciaP1 · Accepted solution]

To avoid waiting to file you should combine the two Form 1098s directly related to the refinance and enter them as one Form 1098 because TurboTax is adding your mortgage balances together and triggering the interest deduction limitation.  You can do this when the loan amount has always been less than the threshold.

So, in your situation, you should enter the Form 1098 from the original lender on its own.  Then, add the details from the second lender and the new lender together and report the totals as the information for the Form 1098 for the new lender.

For more information, including how to handle points, please take a look at What do I do if I have multiple 1098s from refinancing my home debt?

[Edited 02/19/2022| 12:31 PM PST]

@jmc916

[chuckster59]

This doesn't seem to be a GOOD solution as most have multiple 1098's because they refinance their loan with a new company and then have the ability to RECAPTURE POINTS on the original loan.

What about that?

[PatriciaV]

@chuckster59  From the link provided by @AliciaP1 (What do I do if I have multiple 1098s from refinancing my home debt?) --

What if I paid points?

Points on Loans Paid Off in 2021: Enter the points on your 1098 you have started and mark you paid off the loan when promoted.

Points on Loans on New Loans: You'll want to enter a separate 1098 to cover these points paid. When prompted, enter 0.00 for Boxes 1, 2, 5, and the Property (real estate) taxes box, and place a checkmark in Box 7, as you’ve already entered the details on your first 1098. For Box 3, add the date in 2021 when the loan originated.

On the Tell us about any points paid to bank screen, answer in regards to the new loan when asked about points.)

Your other option is to wait until the final Deductible Home Mortgage Interest Wks is available.

[chuckster59]

See, that’s the issue. If you have TWO 1098’s you can’t complete your taxes because it gives you an error telling you the form isn’t ready until mid-February (I think it said Feb. 17). It’s absurd. People complained about similar ills in TT versions past. 

[Marlame]

Which mortgage balance amount should be used? The most recent refi Box 2 or the original loan Box 2. Mine are different since I took out some home improvement funds.

[Marlame]

When I did my taxes after updating TT I put in the original loan 1098 and then the refi loan 1098. I got no error but it screwed up my California tax as it only took the interest from the refi in November and disregarded the entire year's interest from the original loan! So now I have to do amendments and the question is when to do that?

[Marlame]

TT needs to come up with a programmed solution that doesn't require all this tinkering to get to the right solution! This issue has been reported over several tax seasons and it still isn't right. And just blindly going through the program doesn't produce an error---at least not for me---it just produced the wrong result and passed the "review" nonetheless. I figured that out after I filed and now need to do an amended return for California State. Shouldn't have to do all that.  Fix it TT

[tnation5]

I cant file my taxes - "Deductible Home Mortgage Interest Wks: This form has not been finalized  for returns with two or more mortgages and limited mortgage interest. We expect this form to be available after 2/17/21."

I sold and bought a house this year. I sold a house on 4/16/21 (mortgage paid off as of this date). I bought another house on 7/16/21. I have (2) 1098 forms from both loans. 

Do I have to wait until after 2/17/21 or is it possible I made a mistake? When it shows the mistake I made before filing it, it only highlights our "name" box.

[DaveF1006]

It depends. It's possible that you entered this in such a way where the mortgages were combined to total more than $750K, thus limiting your mortgage interest.  Try this solution that is offered in this Turbo Tax post written by JessicaB. Since these are for year 2019, here is how to enter.

1. For the first 1098, you will indicate that there was no loan balance on 01/01/2021 even if one is listed on the form.
2. For the second 1098, you will enter the loan balance as the outstanding mortgage principle as of 01/01/2019 even though the mortgage began in mid year. In this instance, the mortgages will not be combined. If your outstanding mortgage is less than $750K, your full interest paid from both 1098's will be fully deductible. 
3. Lastly, the article says you should not select the box that says the mortgage was paid off or refinanced with another lender.
4. Let me know if this works and you are able to move past this point.

[eshortill]

Same issue as everyone else.  Same issue last year.. why isn't this fixed?  its the same tax rate issue.  I have two houses..  the combined total is slightly over the limit, so I know there is is a percentage variation for the interest I can claim.  Same as last year.  Stuck in review.  Everything is correct, and I know exactly the math that needs to be done but no override so I'm stuck waiting to file my taxes.  the IRS paper is already out there..  I used the worksheet.. so why doesn't TT have it corrected...  I've been ready to file for a week this is super annoying

[cfelbab]

To clarify, I think I am having the same issue. I have a mortgage and a HELOC which together have a balance over $1M and which were issued during the period before the limit was reduced to 750K. It does not appear that the software is calculating this right.I can go into the mortgage deduction form and see that it is not filling in the worksheet with the average mortgage balances and it treats all my mortgage interest as nondeductible which of course results in a large tax bill. I have overrides the value on Schedule A with the right amount (calculated by hand) but I imagine I won't be able to file with this done. Is this essentially the same issue being reported here?

[maxinespring]

I had the same problem filing due to the form not available. Sold a house in May and purchased a home in October.  I followed your instructions and resubmitted my tax return and it was accepted within 10 minutes!  Thank you so much for the info! 

[RaifH]

Yes, essentially you are running into the same situation. The finalized worksheet to correctly calculate the mortgage interest deduction when there are more than one mortgage and the total outstanding principal exceeds $750,000 will be available on February 17, 2022. 

If your HELOC is fully deductible, TurboTax will automatically calculate your average balance on both loans and give you the mortgage interest deduction based on that. Make sure you properly enter the mortgage origination date as that sounds like it will make a large difference in your case. 

@cfelbab

[markb43082]

I am hitting this same issue, but it seems to me I may have entered data incorrectly, as I never had loans totaling over $750,000 at the same time (they do total that over that in aggregate)  - I just did a re-fi of a primary and HELOC (that was all used as part of original financing of home, to prevent mortgage insurance)  into a single new loan. I have three 1098 forms. 

What is the correct way to enter these?