Deductible Home Mortgage Interest Worksheet

[johnpat60]

Thank you for your post! You found the answer to my problem too. Yes, this problem should be fixed in TT.

What else could be wrong in here if this is a glitch?

[AS3]

Has this been resolved? I am running into this issue as well. Clearly a bug and its been months since the time it was first reported!!

[debkrech2010]

Not that I am aware of, I just manually adjusted the numbers to make them correct.

[Phoenix1]

Why is this issue not resolved for California 540? I have a feeling that some low level IT support guys at TT simply don't understand the math behind this situation and keep closing it, without passing it to someone more competent. So much discussion on an obvious issue without any resolution, it's really silly. 

As an example, let's assume a total mortage of around 1.5M via two original loans (1st and 2nd loans) that get consolidated/refinanced to a 3rd loan.

Loan 1 beginning of year balance: 800K (ending balance in June is $0, after Loan 3 refinancing)

Loan 2 beginning of year balance: 700K (ending balance in June is $0, after Loan 3 refinancing)

Above Loan 1 and Loan 2 add up to 1.5M total.

Loan 3 refinances both loans 1 and 2, into a single mortgage worth 1.5M around June of the year, where at the end of year in Dec, loan 3 is worth around 1.4M let's say after some payoff of principle.

TT in the Deductible Home Mortgage Interest Worksheet essentially does this:

Loan 1 average: (800K + 0) / 2 = 400K

Loan 2 average: (700K + 0) / 2 = 350K

Loan 3 average: (1.5M + 1.4M) / 2 = 1.45M

So, while the total mortage(s) at ANY point in time never exceeds 1.5M, the "Average balance of all home acquisition debt" is calculated to be 400K + 350K + 1.45M = 2.2M.. It's utterly ridiculous. How can the "average" be greater than the absolute max value during the year of 1.5M? TT never considers the fact that Loan 3 replaces the other 2 loans and they never co-exist.. Guys seriously. Get your act together. This is basic stuff.

[KeithPre]

Huge help with this response.  Thank you!  I agree it's a glitch that should be fixed!

[MNMS1993]

I'm still stuck...

At the review/smart check stage, I'm being asked to fix an error:

"Check for Entry"

"Deductible Home Mortgage Interest Wks: Fair market value of home must be entered."

"Fair market value of home (box)."

What do I put there?  I've never had to manually enter an amount.  How do I calculate the amount? 

-  I have one mortgage and one home equity loan

I'm lost... 

[DS-CA]

Sorry I don't remember being asked that. But you should be able to find FMV through online service like zillow.com or redfin.com. good luck!  @MNMS1993 

[jlbrick]

This seems to still be an issue in TurboTax 2020.  I created this post:

https://ttlc.intuit.com/community/tax-credits-deductions/discussion/bug-with-refinance-on-a-large-mo...

[mwtolliver]

When reviewing my federal taxes it took me to this worksheet and I made an incorrect entry which substantially lowered my refund.  I have tried to figure out how to fix it including deleting forms, etc.  I even considered starting over, but since I paid TT fees that's not an option.  Can anyone help explain how to make this change??

[WendyN2]

Some TurboTax customers are experiencing an issue with their Home Mortgage Average Balance. This can cause in the 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.

Please note that the IRS is not beginning to accept and process returns until February 12th.

[greg-ishii]

You are fortunate to have the downloaded version, from what I can find there is no way to fix this very same issue using the web version. Considering the number of homes that must have been refinanced this last year due to falling interest rates you would think providing a fix, workaround, or support assistance for this obvious bug would be at the top of their list, but maybe they have even bigger problems with their software? Makes me worry.

[DianeW777]

Thank you for providing this information. We are aware of this experience. Please sign up for email notification when an update related to this issue is available here.

[Mjaeg]

This happened to us this year too. Tore my hair out until I realized that our initial refinanced loan showed the outstanding balance in box 2, but also had additional information at the bottom stating the ending balance was $0. So I entered $0 for box 2, and it came back later asking to review, where it said that the beginning balance of the loan was needed (same number as box 2). Entering that number at that point worked for me. 

[jwilson11112]

My mortgage was purchased by another lender on 2/2020. How do I add the interest on 2 separate accounts?

[JoannaB2]

No, you don't manually enter the total or averaged out 3 mortgage interest statements. You may claim mortgage interest deduction on a loan used to buy/build a home up to $750,000 for married filing joint ($375,000 for married filing separate). The home mortgage loan must be secured by the property to qualify for the deduction. The following are steps to enter deductible home mortgage interest:

1. Login to Turbo Tax.
2. Under Federal Taxes, in Deduction and Credit tab, click "I'll choose what I work on".
3. Under " Your 2020 Deduction and Credit", click update or start next to Mortgage Interest, Refinancing, and Insurance.
4. Under " Home Loan deduction ssummary" click edit  and enter the lender's information, one at a time.
5. Click continue until you get to the screen " Is this loan secured by a property of yours?" 
6. Click Done.
7. The next screen is a question " Do any of the situation apply to you?". Your answer here will determine if your loan exceeded the allowed home mortgage loan amount.

If you still encountered issue/s with entering the data, please click here to receive email notifications.