If you have refinanced your home, it is normal that you have received two forms 1098, one from each loan.
You'll need to enter both 1098 forms on your tax return.
In TurboTax, to enter these forms 1098, please follow these steps:
If you have refinanced your home, it is normal that you have received two forms 1098, one from each loan.
You'll need to enter both 1098 forms on your tax return.
In TurboTax, to enter these forms 1098, please follow these steps:
Should I fill in Real estate taxes paid twice?
Both 1098 has same amount on Real estate taxes paid...
Thank you.
But two complications arise when entering two separate forms for a refi.
First, on the fed form the average balance is calculated as the SUM of the two average balances, as though the loans were both in effect the entire year, rather than as the AVERAGE of the two (or a prorated sum depending on the refi date). That's odd, but doesn't really cause a problem since each loan is over the $1m cap (the orig loan was Jun 2017, so both use the higher cap--no cash taken out).
Second, and more problematic, when the mistaken overall average carries over to the California form, the deduction limit is calculated using the mistaken average as denominator, so I get only about half the credit I should. Since the CA cap is the same as the Fed cap for these loans, the two should have the same deduction. But TT thinks otherwise.
The obvious override is simply to enter a pretend 1098 that combines the two loans and their interest payments, since that way the average is the orig loan's Jan 1 balance plus the refi loan's Dec 31 balance divided by two, and that then carries over correctly to the California form. Or I can just override the miscalculated figures individually.
I'm hoping that the handling of refis will get corrected before filing time.
Please suggest how to proceed?
I am having the same issue. TurboTax thinks I have 2 million in mortgages, when it’s really a single $500,000 debt that’s been refinanced/acquired multiple times.
Am also having same issue, did refinance last year, so received two 1098 form from each lender (for the same property). when we enter two 1098 form both the loan "Outstanding mortgage principal" box 2 is getting added and goes more than 750K, which is causing issue. "mortgages total more than $750,000, your mortgage interest deduction is limited. " Actually my loan balance as of Jan-2019 is 500K". please provide the suggestion should we add all the other boxes from two forms other than box 2 and create one 1098 entry. Thanks JK.
This did not solve my problem either. It is adding the totals into a mortgage that is double what mine actually is. Please advise how to enter the amounts to show our actual mortgage after a refinance with having two 1098 forms. I can't find the answer anywhere.
No, don't enter the Real Estate Taxes paid twice, even though the amount shows on both 1098's.
The 1098's should have an Origination Date in Box 3 which should differentiate an Original Loan 1098 from a Refinanced Loan 1098,so the loan balances would not be added together. When entering your original loan 1098, DON'T indicate 'this loan has been refinanced' (even if it has).
When you enter your Refinanced Loan 1098, indicate YES this loan has been refinanced. You will then be able to indicate whether the entire loan amount was to 'buy, build or improve' your main home or you took CASH OUT in addition to refinancing the old loan (screenshot).
Thing is, although TT shouldn't be adding the two average balances together, that's what it does. It's not a critical issue for Federal, since the user does the limit calculation outside TT (update 2/5: the Federal worksheet, which one gets by QuickZoom but not automatically, now can be persuaded to calculate the prorated average and limited interest deduction correctly, but that doesn't carry over to the corresponding California line), but for California TT does the calculation itself in a worksheet that feeds the (not yet final) Schedule CA, and TT does the calculation wrong. That needs to be corrected by Intuit.
When you enter the refinanced mortgage information in Box 2 it is asking for the amount of the loan as of 01/01/2019. For the refinanced loan the amount is $0 because at the beginning of the year the loan did not have a balance.
Please review the amount for your refinanced loan and the program will work.
Link to Mortage Refinance Deductions
Thank you for your response. So, just to be clear, even though box 2 on the 1098 reads a certain about, I should just plug in 0?
on a similar note, if my mortgage was transferred to another lender during the year, do I also put $0 for box 2 on the new lender’s 1098?
I could’ve sworn box 2 said “balance as of 1/1/2019 OR balance at the time of acquisition” - is that not right?
thanks!!!
The step-by-step help for Box 2 says "If you received a Form 1098 or similar statement from your lender, enter here the amount from box 2, 'outstanding mortgage principal.'", and that the worksheets will draw data directly from the 109 worksheet.
Entering an amount in the TT 1098 worksheet that's different from the bank's 1098 is another way to override the error--but the error is still there. Plus, it means the TT data won't match what's reported to the IRS. Moreover, the "solution" you suggest doesn't actually to the proration correctly, especially if the refi amount differs from the original mortgage's balance on the refi date (as happens, for example, if there are points or if closing costs are included in the refi amount). The amounts on the CA mtg worksheet come automatically from the 1098 amounts on the fed forms.
I can override the starting and ending balances on the California mtg int worksheet, but since the worksheet apparently ignores the "months" entry the result won't be prorated correctly either. Or I can do the calculation outside TT and enter the correctly prorated average directly as an override on the worksheet, which is what I've done until TT corrects its error. I note that correcting the error is going to require gathering more data in step-by-step, since for the moment s-b-s doesn't ask when a refinanced mortgage was paid off or the and so can't do the proration.
There are lots of us here in California who refinanced large mortgages in 2019, so this issue is definitely not confined to me.
My thoughts exactly. And it looks like this problem has been going on awhile. Will there be a fix before tax day?
If the loan was moved to a different lender in 2019 and you have two 1098's to enter:
First, delete both 1098's. Do NOT try to edit.
Enter the older loan first, enter box 2 as it is reported,
THERE WILL BE A SCREEN ASKING "WAS THIS LOAN PAID OFF OR SOLD IN 2019?" CLICK "YES"
(this screen will not appear if you go back and edit)
Continue through the interview
Next, enter the second 1098
If box 2 is blank, enter zero, otherwise enter what is in box 2.
Continue through the interview questions. Do not select that it is a HELC.
Since you clicked that the first 1098 was paid off or refinanced with a different lender, the mortgage balances (box 2) will not be added together.
Thank you for the advice. However when I tried it, I did NOT get a box asking if this loan was paid off or sold during 2019. And this issue still occurred with the California form aggregating the loan debt.
Did you delete the 1098's and start over fresh?
That screen does not come up when editing, only when entering the 1098 initially.
I am having the same issue. I refinanced my original loan in 2019 and then the refinanced loan was sold to another lender so I have actually have three 1098 forms. I deleted all of them and started over with the 1098 for my original loan but unfortunately I'm not being prompted with the screen asking me if my loan was paid off or refinanced.
I followed the instructions. The error persists. Please note that the error isn't in the Federal forms, since the deduction limit is calculated by the user outside TT and entered manually. Rather, the error is in the Ded Home Mort worksheet that feeds Schedule CA in the California return. Rather than have the user calculate the mortgage interest deduction limit, the worksheet draws data directly from the Federal 1098 worksheets and attempts to calculate the deduction limit. However, variously the relevant data don't transfer completely (for example, the "months" and "ending balance" entries necessary to calculate the prorated average, and so the worksheet is still adding the two total mortgage balances together in Part 2 line 2, using that as the denominator to calculate the limit, and so reducing the deduction (in my case) to about half what it should be.
The worksheet should transfer the starting and payoff balances for the original loan, and the starting and end-of-year balances for the refi, plus the date of the refi. It should then calculate the prorated average balance by multiplying each loan's average balance (start minus end divided by 2) by the fraction of the year that loan was active, and then adding those to parts together.
The simplest fix for the moment is to override the amount in Part 2 line 2 with a correctly calculated prorated average; then the rest of the California calculation proceeds properly. I very much hope that TT will fix the worksheet, or alternatively do the same as the Federal form and simply have the user calculate the limit.
And, for the record, I did re-enter the 1098 data from scratch, and responded to queries and checkboxes as you instructed.
Same problem here too. I actually have 3 1098's, 1 from the original loan, 1 from the mortgage broker for 1 months payment and 1 from the bank that finally took over the servicing. I have deleted the information for the 1098's, re-entered it multiple times with no correct result. It keeps saying the standard deduction is best and when I click on the box that says my loans are not over the 750,000 mark, after I click on continue, the refund goes down by a lot and registers it as being over the 750,000 mark by over double. I also have tried to start my refund from scratch and it still does the same nonsense. Intuit needs to get on top of this ASAP or else we are all going to be down the creek without a paddle if the IRS comes a knocking.
Any of you who have gotten the federal form to register that your acquisition debt was less than the 750,000 mark with at least one refi, can you please give us some guidance? Someone mentioned that we fill the forms out outside of TT and then enter it manually. I am not sure what that all means if we are inputting the data directly into TT which then does its magic to get us the wrong info.
Intuit- We need a viable solution for those of us who are running into this refinance nightmare with your product. The solutions that have been posted by the Experts are not doing the trick and every time they get repeated, it makes us not want to use your product more and more after having spent time and money to do our supposed simple taxes.
I kept having this problem in the downloaded version inputting 2 1098s due to a refi. I finally gave up and went through TurboTax online and my refinance is finally being accounted for properly. Very frustrating as I had to re-enter everything.
I tried the online version but still seem to have the same problem. Out of curiosity, on the refinanced loan, did you enter “0” for box 2 since the balance as of 1/1/19 would’ve been 0?
the online version seems to recommend doing it, the downloaded version doesn’t let me enter 0, and the tax rules say I am supposed to enter the amount at the time of origination if after Jan 1 (which is what is written in box 2)
Turbo Tax online didn’t work for me either, it seems. Let me ask you - when you do the online version are you plugging in $0 for box 2 on the refinanced mortgage since no balance on Jan 1? The TT directions appear to require that, however then it would not accurately reflect what’s in the box. Desktop TT will not let me enter 0 for that box, either.