Hi - I'm entering our mortgage interest into TurboTax and it doesn't seem to be calculating the full deduction. Our loan is <$750K and secured by our primary residence, no points. While the loan is a refinance of previous loan, the loan is the most recent and was not used for anything except paying off existing loan. Overall, very simple and straightforward mortgage. The mortgage interest entered is $19,500 and resulted in a tax reduction of approx. $400 (2% of MI amt). In previous years using TT for the same loan, we've seen a pretty big reduction (usually thousands of dollars) in taxes owed after entering mortgage interest, so this is unusual. Also, I entered a charitable contribution ($1720) after entering the mortgage interest and our taxes owed went down by $415 (24% of donation amount).
I looked at Schedule A and Form 1040 and both seem to be capturing the full amount of mortgage interest entered. I scoured the internet and don't see anything about tax laws changing related to the mortgage interest deduction.
I'm totally puzzled and would love any thoughts or ideas of what may be happening and how to fix it. We want to ensure we're getting our full tax benefit on this deduction.
Thank you!
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You said the loan is refinanced - did you have more than one 1098? If so make sure that the amount that you entered for the mortgage balance on the first 1098 is zero even though it shows a balance on the form. TurboTax adds those balances together as though they were two separate loans.
Otherwise I'm just checking your math. The standard deduction for this year for married filing joint is $27,700. If you're single it's $13,850 and if you're a head of household it's $20,800. The two deductions that you mentioned add up to $21,220. So not a huge reduction in taxable income unless you're filing single. The difference between this year and last may just be the fact that the standard deduction went up.
You said the loan is refinanced - did you have more than one 1098? If so make sure that the amount that you entered for the mortgage balance on the first 1098 is zero even though it shows a balance on the form. TurboTax adds those balances together as though they were two separate loans.
Otherwise I'm just checking your math. The standard deduction for this year for married filing joint is $27,700. If you're single it's $13,850 and if you're a head of household it's $20,800. The two deductions that you mentioned add up to $21,220. So not a huge reduction in taxable income unless you're filing single. The difference between this year and last may just be the fact that the standard deduction went up.
Yes I think @RobertB4444 is correct. If you are watching the refund meter change as you enter your deductions, you are probably seeing the difference between the standard deduction before entering the mortgage interest and then it switches to the itemized deduction amount when it is just slightly above the standard amount. This would give the appearance of a little deduction for mortgage interest. Then, with your itemized deductions already above the standard, you see the full effect of adding the charitable deduction.
As a side note, Turbo Tax is no longer adding the balances together for refinances. They seem to have fixed this by not including the balance of the refinanced loan at all in determining the mortgage limitation.
I think you're both right that it's TT flipping from the standard deduction to itemized (and as I'm watching the counter of tax owed/refunded it's calculating off of that incremental difference over the standard deduction, which is why it seems unimpressive). Thanks much!
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