mortgage deduction problem - loan over 750k

[aravjani]

My Turbotax Premier is forcing me into the standard deduction, when I'd benefit from itemizing.  The issue I believe is the new mortgage that is over 750K.  My understanding is that a percentage of my mortgage interest is eligible for deduction, even when the loan is over 750K.  

How do I get the software to make those calculations so that I get the right deduction?  I also have the previous mortgage which I held for 2 months of the year (which was less than 750k).  How can I reconcile all of this?

[RaifH]

While you can manually calculate the average balance of each loan using the method prescribed by the IRS, TurboTax will have the finalized worksheet available on February 17, 2022. This will automatically calculate the home mortgage interest in cases such as yours in which there is more than one Form 1098 and the outstanding principal exceeds $750,000. 

Once you are getting the entire mortgage interest deduction you are entitled to, TurboTax will optimize your tax result by itemizing or taking the standard deduction. 

[aravjani]

Thanks -- Though this didnt solve the problem.  I think it has to do with the fact that I had one mortgage from Jan-March, sold that house and then entered into another mortgage for March - December that was above 750k.

It seems like it's adding the two mortgages together, event though they werent held at the same time. 

How can I address this? 

[Vanessa A]

If your box 2 of your 1098 shows a balance, you can enter $0 since you no longer have a balance on that mortgage. 

[aravjani]

Turbotax wont let me proceed with that answer.  But if I put it to 1, it makes the adjustment.  How should I handle?

[DaveF1006]

Yes, I would record the '1" in Box 2 of the 1098. This will not affect your return and the correct mortgage loan principle is accurate and not significantly impacted by the $1 difference.