Bug with refinance on a large mortgage

[Kat]

From one TT user to another:  This issue IS being investigated by TurboTax.  It is still so early in the tax season.  The IRS doesn't even open tax season until February 12.

If there's one thing I've learned since using TurboTax, it's to WAIT until later in the season to file.  At launch, the programs are rarely without glitches, bugs, etc. that make for later problems.  I realize that many of us need our tax refunds ASAP, but the headache of amending can be avoided by being patient.  We are told that developers are working on this problem (though it did exist in 2019 programs, too). 

I hope your patience is rewarded soon!  

[Fishstew]

The bug is still a problem for me, using the online version. My work-around was to delete both 1098s and reenter the combined information as one 1098. This fixed the erroneous calculation. 

I'm going to wait to file until after 2/12 since TT says they'll push a product update then. 

The idea of waiting to file until later in the tax season because TurboTax has unfixed bugs is hardly an acceptable solution. The result will be lots of users who find a competitor's product that works.

[Kat]

Thanks for your response, @Fishstew .  I've never used any other tax software, so can't compare.  I've not heard of the "promise" by TurboTax to have this issue resolved by any specific date.  Here's hoping....

[gregsokol]

I thought about doing the same, but as far as I understand 1098 are filed to the IRS by the bank. Wouldn't IRS notice the you are not reporting the right 1098 info

[Meeeeechele]

The following is the new guidance that updated in my version of TT:

Multiple 1098s related to a Refinance done in 2020
1. Input just 1 1098 to cover the refinance.
2. Gather all of your 1098s related to the refinance.
3. Separately add up the amounts in Boxes 1, 5 and any property taxes paid
4. Box 1, Box 3 and Property Taxes- Input the total amounts for each on the refinanced debt
5. Box 2- Input the amount of debt on 01/01/2020.
6. Box 3- Mortgage origination date- Input the oldest date on your 1098s related to the refinance

[Kat]

ALL:  I've just learned that developers have reviewed this issue and deemed it is NOT a product defect.  I'll share with you an article that was published today for your assistance.  Thanks for your patience.  Hope this takes care of it for everyone!

What do I do if I have multiple 1098s from refinancing my home debt? 

[JantovenNF]

@Kat 

Thanks for posting this!  That.. seems like really suboptimal fix from TurboTax...

Also, it says:

"If your total home debt is under $375,000 ($250,000 for married filing separate) there is nothing new for you to do in 2020. Enter each 1098 as you normally would."

Those numbers aren't accurate, right?  Isn't it 750k if married or single, and 375k if married filing separately?

[mtpnw2018-]

Since 1098's are reported separately this is going to trigger a problem with the IRS.  I find it unacceptable that TurboTax won't fix the problem.  I don't care if the developers think this is a problem, if it doesn't calculate correctly when entered as intended, each 1098 separately, then it is a problem.  The developers wouldn't think to tell people to enter all their savings earnings under one line or all their stock sales under one line.  Or all their W2's under one line.

They need to FIX the problem, not find a work around.   UNACCEPTABLE.

[pugpapa75]

I whole heartily agree that this is unacceptable.  Telling users to make up a combined 1098 that doesn’t exist is beyond questionable and bound to get people audited.

[jlbrick]

This is a surprising conclusion from the TurboTax developers.

1) As I understood it, the product description of TurboTax is "you enter your forms exactly as you received them, then TurboTax does the math for you and calculates your tax"

2) The help article says that the way TurboTax actually works is "you gather your forms, then read a help article, do some math yourself, and enter the results of your own math into a synthetic form unlike the one you received"

If TurboTax is actually meant to work as in (2) instead of (1), you should ask your marketing department to change copy like the following:

"Filing your taxes has never been easier. Start by answering simple questions about you and your life. We’ll fill out the right forms and guide you through it all step by step as you do your taxes."

[Kat]

@JantovenNF I agree with you.  I've pointed that out to the Moderators for correction.  Thanks for catching that.

[jlbrick]

@Kat 

@JantovenNF 

Presumably the reason that they put $375,000 in the help article is that if your balance is below $375,000, you can still enter your two 1098s as they were printed because the total loan balance ($375k + $375k) will be less than $750k and the bug will not affect you.

This help article is a tacit admission that it's easier to enter your two 1098s separately as you received them than it is to create a new synthetic 1098 using a calculator.  That's why the recommend that people with lower loan balances do it the easy way.  I don't think it's unreasonable to think that *everyone* should be able to do it the easy way.

[Kat]

@jlbrick I see what you're saying.  So confusing, though, at least to me.

[JantovenNF]

@Kat @jlbrick 

It is admittedly rather stunning to me that TurboTax cannot create a code within its software to take an average instead of adding.  I am no programmer, but it seems that is a very, very easy fix to generate in the coding world...

[jlbrick]

I am a professional software engineer and it's my opinion that addressing this bug correctly is relatively straightforward.  If you know the payoff date for the original loan and the origination date for the new loan, you can take a weighted average of the loan balances.

I invested a non-trivial amount of my time filing this bug report and identifying duplicates so that, as one software engineer to another, I could help the team at Intuit address this defect.  It's disappointing to hear that they simply do not care to address it.