IRS Notice CP28

[RedRaider97]

Got a notice that there was an error on my 2024 return for the Home Mortgage Interest Deduction calculation.  I did go into the Amend return to see if I entered the correct amount that was on my Mortgage statement and I did.

My mortgage is over $750k so I am not entitled to the full deduction but I can't see how Turbo Tax calculated the amount it used (which was less than the full amount that I entered in so Turbo Tax did reduce it).

I can't get anyone on the phone to help me figure out if the calculation was right or not - any idea how I can get someone on the phone to help me with this 2024 calculation?

[Opus 17]

You won't get tax help on the phone unless you used the Live version or purchased Audit Defense.

The IRS method is described in publication 536.

https://www.irs.gov/forms-pubs/about-publication-936

If you have one mortgage, and didn't change lenders in the middle of the year, and didn't have an HELOC with a changing balance, the calculation is pretty easy, using the method in the publication.  You can do the calculations and send the IRS a letter of explanation with proof of your work (if the IRS was wrong) or you can do an amended return and just use the correct number from the worksheet instead of letter TT calculate it, if TT was wrong.  

To see what TT did, there should be an internal program worksheet that you should probably be able to see if you download the PDF containing "all forms and worksheets."  However, if you started the amending process, you might have changed your file so that the current state of the worksheet doesn't match what was filed.  

[RedRaider97]

Thanks for the reply!  

I did cancel the Amend process so nothing was changed.  When I go to the main TT screen, at the bottom is "Your Tax Returns and Documents" which when I expand, given an option to "Download/Print Return (PDF)".  Clicking that, it just pulls down the 2024 return without any calculation docs that I can see.  I don't see any other options to pull in additional worksheets.  When I view the return, it just has the actual number TT input for the tax deduction (no calculation).  Anywhere else I might be able to find the actual worksheets?

Same lender all year, no HELOC, and only one mortgage so it should be easy to follow the calculation TT used if I could find it.

[Opus 17]

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@RedRaider97 wrote:

Thanks for the reply!  

I did cancel the Amend process so nothing was changed.  When I go to the main TT screen, at the bottom is "Your Tax Returns and Documents" which when I expand, given an option to "Download/Print Return (PDF)".  Clicking that, it just pulls down the 2024 return without any calculation docs that I can see.  I don't see any other options to pull in additional worksheets.  When I view the return, it just has the actual number TT input for the tax deduction (no calculation).  Anywhere else I might be able to find the actual worksheets?

Same lender all year, no HELOC, and only one mortgage so it should be easy to follow the calculation TT used if I could find it.

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I don't use the online program so I don't have experience with downloading the worksheets instead of just the return, but there should be (or used to be) an option for "download all forms and worksheets."  I'll ask around.

@VolvoGirl  @xmasbaby0  @rjs  @DoninGA 

In any case, you should perform the calculation using the instructions in publication 923.  If the Turbotax calculation was wrong, TT is supposed to cover any interest and fees (if any are charged) but you always owe your own correct tax.   If the TT number is different from the publication 923 number, there is a procedure we can use to get tech support involved even if you can't download the worksheet yourself. 

[RedRaider97]

I worked through the Publication 936 table a number of times to make sure everything was accurate in the calculations.  Before doing the calcs, I did confirm in TT that for 2024, I entered the correct total interest paid that year and the Outstanding Principle.  My original entries into TT were exact matches to the form I received from the mortgage company.

For the table, first I don't have any grandfathered debt so part 1 of the table resulted in $750k qualified loan limit.

Next, for Part 2, I needed to find the average balances of all mortgages.  With the 1 mortgage involved, I took the 2023 outstanding balance on the tax form and added that to the 2024 outstanding balance on the tax form and then divided by 2 per the instructions in publication 936 (these are the only two numbers TT would have also had for calculations as I have been using TT for my taxes for the past 20 years).  After finishing the remainder of the table, the calculation for line 15 (Deductible Home Mortgage Interest) was $36,024.  On my tax return for 2024, TT calculated $36,601 or a different of $577 in my favor.

It is impossible to get anyone live on the phone to discuss.  Any thoughts or ideas on how to get TT to pull the worksheet they used to determine the deductible home mortgage interest amount for my situation to determine if there is a calculation issue?  My second concern is if there is an error, how they suggest I amend the return given if I update the interest amount in the online version to the amount it should be (different than what was on the tax form from the mortgage company) it will then apply a calculation to that correct amount and the number will be wrong again.  Basically, there isnt an option to tell the online version to disregard the calculation and just use the number I input.

Thank you for any help you can provide.  I am so incredibly frustrated that I have paid for and used this product for so many years and the one time I need some support they act like I am not a loyal customer.

[Opus 17]

Did you calculate your average balance using both methods?   There is the first month-last month method and the "Interest paid divided by interest rate" method.   Turbotax is probably set up to use whichever method is more in your favor, and either would be allowed by the IRS.  I will try and look at the worksheet tonight to see how it is calculated (although I can't see your worksheet of course.)

[Opus 17]

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@Opus 17 wrote:

Did you calculate your average balance using both methods?   There is the first month-last month method and the "Interest paid divided by interest rate" method.   Turbotax is probably set up to use whichever method is more in your favor, and either would be allowed by the IRS.  I will try and look at the worksheet tonight to see how it is calculated (although I can't see your worksheet of course.)

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Correction, Turbotax does not include the calculation for the "interest paid divided by interest rate" method.  I found the worksheet and it calculated a test result correctly for me.  We will have to see if someone else can help you download the actual Turbotax worksheet from your file.

Alternatively, if you purchase Turbotax 2024, you should be able to download your data file and open it in the program.  But that's a cost that you shouldn't have to pay to figure this out.

If no one else can help download the worksheet, I can try and flag this for technical support, but it has to go through the forum moderators first.  You should also be able to get support on the phone, are you having trouble getting through or are they refusing to help?  Turbotax will add more operators by the end of January.

Unfortunately, it seems you need to amend your return to change the interest deduction.  (While it would be interesting to figure out the error, it won't change what you owe.)  Here though, if Turbotax is still giving an incorrect calculation for you, you won't be able to enter the correct amount without doing an override, and that also would require the desktop version.  You might be able to get a free copy of the 2024 desktop for amending purposes by calling customer support -- if you get through, don't try to get them to fix the problem. Just tell them you need to file an amended return, and you need the desktop version so you can perform a manual override.

If you got a notice that you owe more tax and penalties, you can file a claim here.  That should also start an investigation.  You must file a claim within 30 days of the notice. 

https://ttlc.intuit.com/turbotax-support/en-us/help-article/intuit-account-billing/submit-claim-turb...

Lastly, double-check your start and end balance, and make sure the balance on your 1098 form is the same as you are reporting as your Jan 1 2024 starting balance.  (If the 1098 is wrong, that could be another source of error.)  A simple transposition (like $845,000 instead of $854,000) can be hard to detect visually. 

[RedRaider97]

Ok, I worked through the interest rate method you suggested.

Interest Paid in 2024: $41,170.87 (used $41,171 for calc)

Interest Rate: 4.875%

TT entered deductible interest on return: $36,601

$41,170 / .04875 = $844513

$750,000 / $844,513 = .888

.888 x $41,170 = $36,559 vs TT entered $36,601 or $42 (Average method resulted in $577 difference)

Maybe they did use the Interest Rate method?

I have gone through every possible option in the IVR and since I don't have live support paid for, there is zero option to get a human being on the line.  

I didnt get a notice that I owe more taxes or penalties but a CP28 notice saying they show and error and I need to correct or it raises my chance of an audit.  It then talks about the $750k limit.

Any thoughts on best route to take to get a view of how they calculated and what numbers they used?  I can't find any worksheets in the online version and can't get a hold of a human being.

Thanks!

[Opus 17]

So the CP28 is just a warning at this point.

https://www.irs.gov/individuals/understanding-your-cp28-notice

It sounds like turbotax claimed $36,601, and using the two different methods in Publication 936 gives you $36,024 or $36,559.

For $42 of deduction (probably owe $10 more tax) I would think about ignoring the issue and wait and see if the IRS sends a stronger letter.  But it's your neck and you might want professional advice.

Or, you can file an amended return using the figure $36,559, and explain in the reason for amended return that you recalculated the deductible mortgage interest using the interest rate method in publication 936.  But as mentioned, to file the amended return with turbotax, you either have to provide false answers in the mortgage interview to get the calculation to come out correctly, or you need to use the Desktop version of the program to prepare the amended return, and enter the correct amount of interest directly on the tax form using the Override method.  I would try calling customer support to ask for a copy of the 2024 software to install on your own computer because you need to file an amended return with an override.

I will flag this for attention just in case.  Can you go to the support menu and locate "Send file to agent"?  This sends an anonymized version of your file to tech support and gives you a token number.  Post the token number here, that can be used to link your concern to the uploaded anonymous file. 

[RedRaider97]

Good news is I think I found where I can download the desktop 2024 version at no cost and can download the tax file.  If I did that, would it show all of the worksheets used and the numbers used by TT to come up with the number?  I think if I could see all of their numbers and calcs I could figure out if an entry is incorrect or which method they used which could them inform me better on which way to go in regards to amending or not.

I have checked everywhere in the online version under my 2024 return and there is no option I could find to send the file to an agent.   

[Opus 17]

Once you have TT installed on your computer and you open your tax data file, you can switch to Forms mode (icon in the top menu bar) and see a list of tax forms.  There is a home mortgage interest worksheet (called Mort Int Wks or something like that) but there is different worksheet where the limitation is calculated (whose name I forget).  

Final numbers like mortgage interest on line 8a of schedule A usually can't be directly edited, but double-clicking on the number will usually take you to the worksheet where the number was calculated.  There is an override command in the Forms menu that will allow you to directly enter a number into a normally calculated space, that you can use to enter the correct interest amount when you are ready to amend.

[SuziM]

Hi @RedRaider97,

I have sent you a private message to better help you. Please respond there if you are still in need of assistance.  

[RedRaider97]

Opus17 - i installed it and downloaded the Federal return and was so close until it required the download of my 5 state taxes.  It would cost me $180 to load them into the program so while I thought I was close, I aborted that path.  

Fortunately, Suzi responded and think she may be able to help so going down that path now.  You have been absolutely amazing trying to walk me through this.  Just wanted to tell you how much I appreciate you!

[Opus 17]

Yeah, if you have multiple states, you often have to install them before the file will open, even if you only want to amend federal.