Mortgage interest deduction disappearing

[peterwoggle]

My mortgage interest deduction disappears when I enter that it's a refinance of a pre-2017 loan. Then the "edit" button takes me to the same page (a loop) without letting me re-enter the flow. There is clearly some kind of TurboTax bug (both the deduction computation and the edit info flow).

Steps:

• I enter my 1098 with a loan balance between 750K and 1M. Immediately the refund tallies at the top show I owe less (makes sense because of the mortgage deduction).
• After entering the 1098, TT has a follow-up flow that says I may be eligible for a larger deduction (which I am, because it's a refinance of an old loan).
• I enter that the loan was a refinance from before 2017. The deduction completely disappears (tallies at the top revert to before I entered my 1098).
• TT doesn't include any mortgage interest deduction in my itemized deduction (and therefore says I should take the standard deduction). The mortgage interest still shows up on the main "deductions and credits" page, but none of it is included in my itemized deductions. Note this is my primary residence, and it has worked every other past year filing with TT.

Backing up a bit, the flow after entering my pre-2017 home purchase date says there may be IRS guidelines preventing a deduction, and to push "edit" next to the loan details. But when I push that button, it just reloads the same page--it doesn't show me anything new.

From the main "deductions and credits" page, if I go back into the 1098 entry flow, I can get back to the "We need a bit more info to see if you qualify" for the mortgage interest deduction, with two buttons: "skip for now" and "enter info" (I think it's referring to the info I already entered when I added the 1098), but both buttons take me back to the overall 1098 info page, without letting me edit the info. I have to delete the entire 1098 and re-import it to get back to that flow. So there's another TT bug (possibly related?).

This error has never occurred previous years using TT for the same loan.

[OWENWTAX]

I have run into similar issue with mortgage interest not counting towards itemized deduction. Although I had put in relevant 1098 information in previous pages, the deduction pages still shows 0 and recommended a standard deduction. If I force to use itemized deduction, the list still shows 0 under interest, and deduction is much lower. 

This was a loan refinanced in 2020 for a purchase originated in 2017. Have been using Turbotax but ever had issues like this with deductions. I've been spinning my wheels clicking through multiple steps and ensure every input was correct. 

This is the VERY reason I registered the intuit account to report this issue/post this question. Glad to see I'm not alone but sorry to see no solutions offered yet.

[MichaelG81]

Yes, this is working in both desktop and online versions. It is deducting partial amount of itemized deduction of mortgage interest only for loan of assumed value 1,000,000. Make sure you enter both 1098's since there should be two if you refinanced in 2022. Follow these steps:

If you are on your most recent 1098 for new mortgage select Yes; for the other 1098 or first mortgage select no.

Also keep in mind the maximums, According to IRS: You can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebtedness. However, higher limitations ($1 million ($500,000 if married filing separately)) apply if you are deducting mortgage interest from indebtedness incurred before December 16, 2017.

@peterwoggle 

@OWENWTAX 

[peterwoggle]

Thank you for the response, but this is not my issue. I only have one 1098 because I refinanced in 2021, not last year.

• I enter my (only) 1098 and, at first, my tax liability decreases.
• The flow then says I might get a bigger deduction and asks when I purchased the property that was refinanced (in 2021). I enter the date (before 2017).
• My tax liability jumps back up: no mortgage interest deduction at all.

@MichaelG81 

[seeker22]

my question is like others in that I entered the mortgage interest in the proper box, but the amount is gone when I proceed.

[PatriciaV]

Please clarify the following:

1. What information was entered from Form 1098 - all boxes. 
2. Was this secured by property you own? Did you report points as well? 
3. Did you check the box for this being the most recent 1098? 
4. Did you use the loan for anything other than paying off the previous loan? 
5. Did TurboTax confirm you were taking the Standard deduction?

[peterwoggle]

1. I entered boxes 1, 2, 3 from my only 1098 (all boxes with any values). Box 2 is between $750K and $1M; box 3 is a date in 2021.
2. Yes, secured by a property I own (primary residence). I didn't pay any points.
3. Yes, I checked that it's the latest 1098.
4. I checked that it's a refinance and that I did NOT use use the loan for anything else.
5. When I click "done with tax breaks," TurboTax suggests I take the standard deduction (I have not accepted that and continued from there). The estimated breakdown on that page shows SALT and deductible charity, but does not show mortgage interest deduction. Similarly, the total itemized deductions equals the sum of those two values (SALT + charity), without mortgage interest.

@PatriciaV @MichaelG81 

[peterwoggle]

I see this problem whether I import my 1098 from my bank or type it myself. In both cases, the deduction applies at first, but AFTER I enter the 1098, it takes me to that extra flow with the heading "Tell us a little more about your loan with..." When it asks for the date that we originally bought the property (before 2017 for me), that's when TT seems to "revert" my deduction, as if the pre-2017 date was disqualifying. I do see a deduction in the tallies before that point.

[AmyC]

The good news is that schedule A is sent to the IRS and it has one box with mortgage interest. The program is doing work behind the scenes trying to get the information right. It does not matter what date or balance you use since it does not go on the Sch A. Only the correct mortgage interest is critical.

If you are confident in your calculations and ready with the paperwork in case the IRS asks, enter the information such that sch A is correct.

See: 

• About Publication 936, Home Mortgage Interest Deduction 
• About Schedule A (Form 1040), Itemized Deductions - Internal Revenue Service

[peterwoggle]

The problem seems to have been fixed. It worked today, correctly recommending itemized deductions, without my changing anything.

[mantax22]

I am hitting this exact issue and caused me to miss the filling deadline. My itemized deduction are more than standard deduction amount but this still recommends standard deduction which is an error. 

[mantax22]

Forced the TurboTax to quit and update. Then deleted form 1098 before adding it back. It fixed the issue. I hope other impacted users catch it before filling the return. . 

[sentabo]

I had the same issue. I closed out TT, came back in, deleted the financial institution and re-entered it along with the interest info. Issue resolved.

[eamike261]

Same bug still exists in 2024. Same solution as the others. Closing turbotax, reopening, deleting my mortgage information and re-enterting seems to have fixed it. It's scary that turbotax is costing unsuspecting people thousands of dollars with this bug. I'll never recommend turbotax to any home owner because of this.