I am having 2 issues regarding the mortgage interest deduction that I could use some clarification on.
1. We have a mortgage originated in 2016 for over $1,000,000. I understand that the mortgage interest is deductible up to the first $1,000,000 of debt. The TurboTax instructions say to follow the IRS 936 guidelines and enter the adjusted interest, which for us is around 70% of the actual interested we paid. However, when I do so, TurboTax ends up deducting ~70% of the already adjusted value. If I enter in the full amount of interest paid, TurboTax says our deductible interest is around 70% of the full amount, which is what I expect. Is TurboTax performing the adjustment automatically? Are the instructions simply incorrect/misleading?
2. I later encounter a screen for the CA mortgage interest adjustment. Since our loan originated in 2016 (prior to the 2017 transition to a $750,000 limit), we are still subject to the older $1,000,000 limit. As such, I didn't think we would qualify for the mortgage interest adjustment. However, TurboTax says that we are allowed a $3,000 adjustment. Is that correct?
Thanks for any help. Sorry for the long questions.
1. I printed out the resulting forms and confirmed that TurboTax is automatically computing the correct limited deduction. The Schedule A and Deductible Home Mortgage Interest Worksheet have the expected values and calculations. I think the instructions were misleading.
2. Comparing the Schedule A Deductible Home Mortgage Interest Worksheet and the CA 540/540NR Deductible Home Mortgage Interest Worksheet, it appears that the $3,000 difference is due to an additional $100,000 allowed for home equity debt that raises the qualified loan limit to $1,100,000, compared to the federal limit of $1,000,000.
1. I printed out the resulting forms and confirmed that TurboTax is automatically computing the correct limited deduction. The Schedule A and Deductible Home Mortgage Interest Worksheet have the expected values and calculations. I think the instructions were misleading.
2. Comparing the Schedule A Deductible Home Mortgage Interest Worksheet and the CA 540/540NR Deductible Home Mortgage Interest Worksheet, it appears that the $3,000 difference is due to an additional $100,000 allowed for home equity debt that raises the qualified loan limit to $1,100,000, compared to the federal limit of $1,000,000.
My interest for this past year on an existing balance of under $230,000 is $7396. This amount I entered, but does not show as a deduction on the final calculation where last year I was allowed the deduction of $8611.
waiting on response to query why I am not getting a mortgage interest deduction.
still waiting for query why I am not getting mortgage interest deduction.
There is a known problem with Home Mortgage Deduction. TurboTax is working to fix the problem and the many other issues. There are many changes due to the CARES Act that require software upgrades. We have not been given an expected date for the fix yet. Please check back often to see if you can file your return.
OR
In the meantime, you can try this work around. You did not provide the details of your Mortgage situation and therefore I am giving you a general work around that might help. Please try this.
If there is a refi and there was an outstanding mortgage principal listed in both of them on Line 2 on the 1098. When you do put an outstanding balance in both forms, then the program adds them together and if that number is greater than $750k, then it puts you in the category to "limit interest". To get that to go away, you need to go back to the deductions section and click on "edit" mortgage interest statement. Change the line 2 of the mortgage that you no longer owe on (like the one that you refinanced and paid off) to a 0 (zero) because you have refinanced out of that loan and no longer have an "outstanding mortgage principal". Once you change one of them to zero (the one that was paid off by the refinance) then it should no longer pop up with that error at the end when you go to file.
Will the fix be an automatic update to the software? I am having similar issues. $8426 in interest paid that has always been deductible does not calculate as the deduction being taken. Any idea when the update will go through?
TurboTax Online is updated automatically. In TurboTax Desktop versions, click Online / Check for updates in the upper left hand corner of the screen.
Please sign up for email notifications when an update related to this issue is available. See this TurboTax Help.
How many 1098's and how many properties are you reporting? See this TurboTax Help.
Also, perhaps this will be helpful.
In TurboTax Online Deluxe, I was able to enter a home loan on an IRS form 1098 and the second IRS form 1098 for the refinanced loan. For the refinanced loan, I used the balance of the loan at the time of loan pay-off.
I was given the full mortgage interest deduction and the Home Mortgage Interest Limitation Worksheet did not add the two mortgage balances together.
The entries were made at Federal / Deductions & Credits / Mortgage Interest (Form 1098).
Entries for the original loan
Do any of these uncommon situations, I entered None of these apply.
Did you pay points, I entered I’ve already deducted.
Was this loan paid off or refinanced, I entered Yes.
Is this loan a home equity, I entered No, this is the original loan.
Entries for the second loan
Do any of these uncommon situations, I entered None of these apply.
Did you pay points, I entered I didn’t pay points.
Was this loan paid off or refinanced, I entered No.
Is this loan a home equity, I entered Yes, this is a loan I’ve refinanced.
So what type of loan is it? I entered A mortgage loan that I’ve refinanced.
Have you ever pulled cash? I entered No.
I understand that Turbo Tax software is not working correctly for mortgage interest deduction.
I am among your customers wherein your software is NOT properly calculating my mortgage interest.
Rather it is significantly under reporting the proper amount for Itemization.
When will this software error be fixed????
Rather than seeing your tv commercials for expert help and Free Free Free, how about fixing the problem and help me who paid for your software.
I REFINANCED LAST YEAR AND HAVE INTEREST TOTALS FOR BOTH VENDORS
PNC BANK $3,581.06 AND THE MONEY SOURCE INC $5409.54 A TOTAL OF $8990.60. WHEN MY RETURN WAS PROCESSED IT ONLY PICKED UP $3581.06, HOW DO I FIX THIS?
WHEN I WENT THRU THE STEPS FOR THE INTEREST I ENTERED BOTH MORTGAGE INTEREST AND IT ONLY PICKED UP PNC BANK FOR 3,581.00 SHOULD I JUST PUT THE TOTAL FOR BOTH
If the total amount of your mortgage balance exceeds $750,000, then the amount might be limited.
Mortgage interest deduction limits
Or are you able to itemize your deductions or is your return being calculated using the standard deduction?
Standard deduction versus Itemized deduction
To determine what deduction is being used on your return, log back into TurboTax.
TurboTax will use the deduction that yields the highest tax benefit for you.
My home interest and charitable deductions do not lessen my federal tax amount
You may have enough deductions to be able to itemized thus receiving the standard deduction. The second possibility is that you may have reduced your taxable income to zero with all of your itemized deductions. To see if you are receiving the standard deduction or itemize deductions:
I just realized that the mortgage interest wasn't calculated and I submitted my return. Now what? wait until you fix the bug and then file an amendment? Since I owed (without the mortgage interest) will the IRS now refund my payment?
Yes, you can file your amendment now.I would suggest you contact a live support agent to assist you in entering the information in correctly. Please use this link to Contact Us to contact live help.
Once your amendment is filed, you should see a refund on your amended return.
I tried the method you mentioned below by "change my deduction" and TurboTax does not allow the mortgage interest deduction that was paid. The house balance is below the threshold of $750,000. It only picks up the state and local taxes (state income tax) that was paid but did not not allow the mortgage interest deduction or property tax paid. The correct total itemized deduction should be $21,840.10 but TurboTax is only allowing $10,500. Therefore, recommending the standard deduction of $18,650.
I paid for the TurboTax Deluxe software and did not expect this problem to persist.
Not cool Turbo Tax. Some of us are filing now and the mortgage interest glitch is not fixed. I'll have to file an amendment - the program only would use half of my interest paid no matter what I tried. The mortgage interest change happened last year - I bet my taxes for last year are wrong too. AND you can only find it if you actually look at your 1040 and see how the calculation comes out. Bad form. I'm not happy.
Was this issue fixed for the 2021 TT version? When inputting all the mortgage information and questions, I get a "congratulations $x,xxx of mortgage interest was deducted"... my issue is it's $20,000 off. Basically TT only says the HELOC interest was deductible, not the mortgage loan too. Maybe the final returns have the correct amount, but this pop-up message is incorrect!
Let's not assume that the forms are reporting correct on the return. We will ensure that you are receiving your allowable Mortgage interest deeduction. With the expected amount being off by more than $20,000 there must be a reporting issue.
First we need the specifics of your mortgage interest situation. Sounds like you had a Mortgage and a HELOC.
But be aware that home equity (HELOC) interest is only deductible if the money was used to buy or improve the property that is secured by the loan.
When you have more than one Form 1098 with the refinance info and both show the same balance of the mortgage, TurboTax adds the amounts together. And that may lead to a limitation of the deduction, because the balance is then overstated. To avoid this, make sure that you're not reporting the same mortgage balance twice.
Try following these steps to enter the Mortgage Interest Deduction:
If you refinanced last year, you’ll have a Form 1098 from your previous lender and one from the lender you refinanced with. You’ll need both forms.
Follow these steps to enter your mortgage info:
Next, finish adding info for boxes 2, 3, 7, and 11 using Form 1098 for the original loan.
There is a problem with mortgage interest deductions. Amounts listed on step by step and listed on the Deduction Summary page are not being transferred to the Schedule A in the forms section, and are not being added to the total deduction amount being subtracted from adjusted gross income.
I got the interest amount to be considered if I went into the forms and posted the amount to the Schedule A directly. My interest amounts were minimal, but it may work as a workaround for others.
nothing provided in any of your answers. after this probable some other tax software since after over 20 years with turbo tax.... cannot get help or an answer. in North Caroline, income is 142,000, this year head of household, mortgage interest is 5,200 and says standard deductions is best at around 5,200, other approved deductions are around 20,000..... 20,000 + 5,200 = 25,200..... so why telling me standard is better .... and 25,200 is greater than standard of around 23,500 deduction.