Deductible Home Mortgage Interest Worksheet

[JWillerMp]

Thanks for the info! Because of you, I was able to figure out what was going on with this year's mortgage interest Hopefully this will help others as well.

Last year I had two 1098's: one from an Refinance loan, and one from a Home Equity loan. This year I only had a 1098 from the Refinanced loan. On this year's worksheet, I found that the amount on line C from my last year's home equity 1098 was carrying to this year's refinance loan's 1098. Once I removed the amount, the full mortgage interest was being used. 

[Unusual]

Is there a fix for this in the online platform? Spent an hour on the phone with 2 Turbo Tax advisor, they have no idea how to fix this!

[JamesG1]

Some TurboTax customers are experiencing an issue with their home mortgage average balance. This can cause the home mortgage interest to be incorrectly limited.  This may be affecting your tax return.

Please sign up for email notifications when an update related to this issue is available.

See this TurboTax Help.

[doshiumang]

so what is the solution, there is no resolution yet right

[Cynthiad66]

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

[doshiumang]

But when I put zero it complains saying missing outstanding motrgage principal. So for now I have put $1 there to override that double error

But this is a bug of TurboTax 

[xiangye]

This thread is about a bug last year, which TT did not fix at all. 

I signed up through the form. Will TT fix this issue this year or we should wait next year to switch something different? 

[alek]

This doesn't fix the issue of what is displayed on the deductible Home Mortgage Interest Worksheet.

It still reflects the incorrect average balance of debt

[KrisD15]

The worksheet is an internal document, it doesn't get generated as part of your return. It is not transmitted with your return to the IRS. 

There are a couple ways to determine your mortgage balance and TurboTax only supports one way. 

If you are able to compute the proper amount of interest yourself, you can enter that amount. 

When you get to the screen that says your interest may be limited, select "YES" and on the next screen, enter the full amount that you are able to deduct. 

[Ernimal]

This are exactly my thoughts. How is it appropriate to combine multiple 1098s from different parties? It's not. I've been using TT for nearly 10 years and I think this year, I'll pony up the money and go to an expert. Kinda sad, because I used to enjoy doing my own taxes. This has made it far too confusing.

[alek]

Same here! Very frustrating, I already paid for the software, if Turbotax can't fix the issue they need to cover the cost of having taxes prepared by an expert.

[mmorale3]

Same issue here with Deluxe edition 2020. Not using TT next year!

[fliu71828]

I had the same problem.  TurboTax mistakenly adds up the outstanding balances of all mortgages in Schedule A Deductible Home Mortgage Interest Worksheet.  This worksheet is labeled “Ded Home Mort”, which is below “Schedule A” and “Home Int Wkst” in the list of forms in TurboTax.  My solution is to overwrite lines 7 and 12, which are related to loan balances.  With this solution, my mortgage interest deduction was no longer limited incorrectly and IRS has accepted my return.

[alek]

Override with zero?

[JohnB5677]

If you have multiple 1098s I suggest you enter each one separately.

If a Mortgage is paid off, or re-financed you should:

• Enter $1 in Box 2 Outstanding Mortgage principal for the Refinanced / Paid off mortgage
• Every 1098 should be posted.
• The final 1098 for that property will have the full loan amount as reflected in Box 2.
• If you have multiple properties, you should follow this procedure for each property.

This will properly record every 1098, and avoid any issue with mortgage limitations.

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.

If your combined home debt is under $750,000 ($750,000 for married filing jointly and $375,000 for married filing separately), there's nothing new for you to do in 2020. Enter each 1098 as you normally would.