Can't file - apparent bug from last year is back? "Limit Int/points on 1098" caused by a refinance

[reallyfrustrated]

I am being asked to enter something in this box before I can file. Apparently this is for loans of over 1M, which mine is not, and from what I can tell by reading threads from last year, it is caused by me refinancing with a new lender, resulting in two 1098s. I am using the online version, and see there was a workaround last year, shown in this thread, but it doesn't work now due to the "Do any of these situations apply to you?" screen changing, so there's no more "Yes" button to click. https://ttlc.intuit.com/community/tax-credits-deductions/discussion/issue-with-limited-interest-and-...

My mortgage interest does not need to be limited, but I have no way of changing that "yes" to "no". So will this be fixed? I have no idea what I would put in that box, and it sounds like this is impacting the amount of my return. 

[gloriah5200]

Yes, since  your return contained more than one 1098 in it with one refinanced during the year, not an open mortgage at the end of the year, it is reflecting a principal balance outstanding at the end of the year in box 2, so you will need to leave that box blank or enter 0 when you input it into your return. Since you received two 1098 forms, enter both of them (first the one from your original loan, then the one from your refinance), but don't add them together. 

The software is totaling up the total mortgages owed at the end of the year and if it exceeds 1M, there are limitations to the deduction amount.

If they're both from the same lender, and one of them has the “Corrected” checkbox marked at the top, enter the corrected 1098 and discard or shred the other one. (In the case of a refinance, it's best to enter the 1098 from your original loan before the 1098 from your refinance.)

The software is totaling up the total mortgages owed at the end of the year and if it exceeds 1M, there are limitations to the deduction amount.

I refinanced my home what can I deduct

How do I handle Multiple 1098s

[reallyfrustrated]

I just entered 0 and it knocked about $800 off my return, making it lower than it's been for many years. This does not seem correct.

[Meeeechele]

I'm having the exact same issue, and it won't allow me to enter 0.00 in Box 2 for outstanding mortgage.

[reallyfrustrated]

Alright, I think I got it - so I wasn't supposed to enter 0 in the screenshotted part of my original question, I was supposed to enter 0 for outstanding balance of the 1098 that was paid off in the refinance.

[gloriah5200]

Here is some new information to follow in your return (especially note change on box 2 entry):

1. Log into TurboTax 
2. Go to the federal section and choose Deductions & Credits
3. On the page “Your tax breaks”, select Mortgage Interest and Refinancing (Form 1098) and Start
4. Delete any Forms 1098-MTGE you have already entered in the program. Then choose the button “Add a 1098”. 
5. Enter the details from your FIRST Form 1098 – the one from your old mortgage company or before the refinance occurred. Be certain to enter all the information, including the amount in Box 2 of your 1098. According to the updated 2020 instructions for Form 1098, Box 2 should show an amount. For a loan prior to 01/01/20, the amount should be the balance of your loan as of 01/01/20. For the loan taken out in 2020 (including refinance loan or when the loan is sold to another mortgage company), the balance should be as of the date of the loan origination.
6. Continue through the interview until you reach the screen “Was this loan paid off or refinanced with a different lender in 2020?” If you’re entering the original loan which is still open, say No. 
7. On the screen “Is this loan a home equity line of credit or a loan you’ve ever refinanced”, say Yes if this has been refinanced or if it is a heloc
8. Continue to complete the first 1098. 
9. Add your next 1098. Be certain to enter all the information, including the amount in Box 2 of your 1098. If there is not an amount in this box, please contact your mortgage lender for the amount. It is required for an accurate calculation
10. When you reach the screen “Is this loan a home equity line of credit or a loan you've ever refinanced?” say Yes. Select the correct radio buttons and Continue to complete the interview.
11. Click Done. If presented with a followup question about the interest limitation and your loan balance is under $750,000 then your deduction is not limited - say No. If your loan is over $750,000 then the deduction is limited. Say Yes. You will need to manually calculate the adjustment. Please see Page 12 of IRS Pub. 936 for a worksheet that will help you calculate the amount. 

[TamaraHudson]

I'm not getting the option to state this loan was paid off/refinanced. Where is that question? It does not come up when just walking me through. 

[TamaraHudson]

I hope this helps everyone...

I was having the same problem. I ultimately deleted info from my loan that auto-populated from my 2019 return and reentered it. It worked perfectly. I think the glitch has something to do with it pulling the info from my previous return. 

[peter85]

This is still not working for me.  In my case I have an original loan, then a second 1098 when they sold the servicing, and then I refi'd for a third 1098.  Your program is still limiting my deduction in incorrect ways, and deleting the carried-over one and starting over did not solve it for me.  Should I start putting 0 in box 2 just to trick your program?

[PattiF]

Some TurboTax customers are experiencing an issue with their Home Mortgage Average Balance. This can cause the Home Mortgage Interest to be incorrectly limited.

If you're experiencing  the issue above,  please go here to receive email notifications when any updates related to this issue become available.