I refinanced and have two 1098 forms

[dan971]

@AmyC  it appears you are confirming that none of the feedback from this thread is being shared back with the engineering/product teams. I’ve been a long time customer but this (and another issue) encountered this tax year is really making me rethink how I handle my taxes moving forward. 

I have filed my 2020 return already but it just upsets me that TurboTax product seems to not be making much effort at addressing this issue and many customers may be overpaying taxes due to it. The whole point of an application like TurboTax is to allow the average user to not have to understand the underlying tax laws and forms as deeply as would otherwise be needed.  I did provide this comment when filing — I will check next season to see whether the issue is fixed before choosing a product.

Is there a list of “known issues” for each tax year that customers can check so that they can be aware of these issues ahead of time? Is this issue listed? 

[AmyC]

@GoneSailin74 I would love to agree with you. I know that I have learned that sometimes our software does things in what I think is an awkward way because of other issues. Each software is different and TurboTax is changing daily with all the tax laws in various states still being revised. I am sorry that it is frustrating.

If your mortgage interest on your 1098 forms are near your tax form entry, there is not a problem. The IRS understands rounding issues, checks limitations, etc.

[GoneSailin74]

@Am I have two forms. Intuit has advised me to combine them into one made up form that the IRS doesn’t have.  Never mind that if I just followed the instructions and correctly entered my forms per the TurboTax application my deduction was INCORRECTLY reduced. I happened to notice my refund WENT DOWN when I CORRECTLY entered the forms. 

What do you not understand about an incorrect calculation is happening for people, resulting in OVERPAYMENT. Intuit’s “solution” (if a customer happens to notice) is to synthetically combine forms that banks filed with the IRS into one new form.  That seems downright stupid. 

We can’t figure out why Intuit doesn’t care that the tax returns are WRONG. 

[GoneSailin74]

@AmyC 

FWIW Turbo Tax calculated thousands of dollars in overpayment that I happened to catch. This is WAY beyond a rounding error. 

[mhaanraadts]

I've stated it earlier in the thread but the only way to properly fix this, is to go to 'forms' mode and manually edit the correct values.

[bkharden]

I am 100% sure I filed owing way more than necessary with TT for 2019 for this exact reason. This is a simple problem but TT fails here. Its very common. I now have two scenarios. 1) sell a home over the limit, but a home over the limit. Now its even a refi for the dame home. To see the problem all you need to do is add both, then remove one, and you may see you are better off claiming the bigger one, not claiming both on interest. I gave up last year and filed anyway assuming the tax law had me for some reason. I sold a home, purchased a home. Both over 750k (California that's a 2 bedroom apartment). I had one home for 9 months, the second was double the cost for 3. If I removed the 3 month I got more back. But it was close to half the interest of the first. Why?

I saved a few bucks with TurboTax and I believe it cost me 100X. Please fix this. I have the same issue this year. This year, all I did was refi. I purchased in aug 2019. Refi in Feb 2020. If I enter just the refi (march to dec) then I get back tons, If I add the smaller one from jan to feb, then I owe big time. I went to the forms and the answers are WRONG. I did the wizard questions 3 times now. At least I know when the number should go up or down. But so mad I filed last year and have to fix that. Big $$ lost. 

FIX PLEASE for the sake of all 

[doT]

Here are my thoughts on this since I found this last year and was about to pay thousands more in taxes than I needed to.  I emailed TT tech support and called multiple times and was told it would be fixed last year.  It never was.....fast forward to this year and it still isn't fixed and it sounds like TT support is basically telling everyone to go pound sand.  

I think everyone on this thread should explain the problem in an email and then send that email off to as many news sites as you can.  One thing that will get TT off their a$# is bad publicity.  If everyone does this a few times a day to lots of new stations, someone will pick it up.  If you refinanced this year (LOTS of people refinanced this year) and your mortgage was more than $375k, you are overpaying using TT.   I guarantee that some news station will pick this up and run with it.  You could also just blast it on social media while you are at it.  

In the meantime....I'm not sure how class action lawsuits work but this sounds like it could be one. They know it's a problem and have done nothing to fix it which in turn is causing customers money.  Their own people (I think it's TT employees) on this site are giving out bogus workarounds that could get people in trouble if they are audited.  

Just my thoughts....I won't be using TT moving forward after this year due to this and I'm sure lots of others won't either if they found out what TT did and how they are not informing people of their  mistake.  

[taxCLUE2]

I actually refinanced twice and both time the loans got sold following closing.  And the first time was HELOC consolidation, so got 6 lenders. 

Don't know if this is new instructions but the PC version says to add them all up enter it once. I guess its too hard for the software guys to do it for you.  ¯\_(ツ)_/¯

If they don't know how to do it then should not lobby congress not to simplify the tax code.

---------------------

What if I have multiple 1098s related to a refinance done in 2020?

Hold up! Follow these instructions if you refinanced last year and your new loan amount is $375,000 or more ($250,000 if Married Filing Separately).

If you refinanced last year, you will have a 1098 from your previous lender and one from the lender you refinanced with. You'll need both forms to enter the details for this screen.

1. 1. Gather all of your 1098 forms related to your refinance, e.g. the form from your original lender and the form from your new lender.
2. 2. Grab a calculator and add the Mortgage Interest Received (Box 1) amount from each form and enter the total in TurboTax as Box 1 Mortgage interest.
3. 3. Add the box 5 Mortgage Insurance Premium from each form and enter the total as Box 5 Mortgage insurance premiums. (If you weren't required to pay mortgage insurance premiums, these boxes will be blank on your forms and you won't enter anything here.)
4. 4. Add the property tax paid from each form and enter it here next to Property (real estate) taxes paid.
5. 5. Enter the remaining items from the 1098 loan that was paid off in 2020 for the Outstanding Mortgage Principal (Box 2), Mortgage Origination Date (Box 3), and the checkbox on box 7 (address of property securing the mortgage)

 It's uncommon but you could have additional 1098 forms, for example, you refinanced multiple times or your loan was sold by your lender. If you do, follow the same steps but be sure to include info from all of your forms in your calculations for steps 2-4.

 Once you're done here, hold on to your forms for when we ask about any points you paid when you refinanced. Points are a fee you pay to reduce your loan's interest rate. If you paid points, you'll see an amount in box 6 of the 1098 for your refinance.

[akenbake24]

Is this resolved for 2022?

[DianeW777]

The resolution is provided in the articles below.  It's important to follow them carefully so that TurboTax can process the numbers for your return.  Keep in mind that the Forms 1098 do not go with the tax return.  The actual numbers for the mortgage interest allows the tax software to calculate within the required limits.  The IRS already has the forms so the exact detail of each form is not required for your tax return preparation.

What if I have more than two 1098s?

You should combine all of the 1098s directly related to the home mortgage and enter it as one 1098.  A sale of mortgages is a perfect example of when this will be the best action. The key is that all of your mortgage interest is included with your tax return.  Keep all of your Forms 1098 with your tax return for the details.

Add each box that has an entry and enter it in the same form with the mortgage interest.

NOTE:  The outstanding loan balance should be the actual loan balance, do not add that together from each form.  Use the most recent lender's loan balance when requested for that figure. 

@akenbake24

• How do I handle multiple 1098 forms?
• What do I do if I have multiple 1098 forms from refinancing?

[dan971]

Since Intuit has no interest in actually fixing their software to deal with this situation, I have lost trust in TurboTax. Who knows what other money costing bugs are lurking. I will look for a new tax solution for tax year 2021.

[jgackson]

Something's still awry (albeit differently) with the Ded Home Mort worksheet, at least for a refi subject to the $1m limit applicable to my loan, whose origin was back in 2017. (The same problem may occur for post-2017 loans subject to the $750k limit, but I don't have one of those.)

1. The worksheet flags "name shown on return" as incomplete, even though that's copied automatically from the return.
2. I have two 1098s from a 2021 refi, no cash out. The worksheet copies the info from the more recent loan as "Loan 1" in part 1, but it omits the older (refinanced) loan.
3. Line 16 in worksheet therefore calculates the limited interest using only the newer loan.
4. Line 17 then lists the total interest from the older (refinanced) loan, as though the interest on that loan were not limited. That would be nice, of course, but it's not correct--the older loan's data should appear as "Loan 2" in Part 1, and therefore carry through to lines 12, 13, and therefore 16. Line 17 should be 0.
5. If I override the entries in Lines 12 and 13, using the average-balance calculation specified in Pub 936, then the rest of the calculations are correct, and carry through properly to the California return. (Presumably I could get the same result by using overrides to populate "Loan 2" correctly.)

TurboTax's standard solution to this is to enter the data from a refi in a single, consolidate 1098. That yields the correct result, but it means that the TT return's 1098s won't match what's submitted to the IRS by the lender. TT should not be advising taxpayers to change what's reported to the IRS.

[RotorJoe1]

I've been struggling with this for the last couple weeks and I'm thinking I should call TT in hopes the support person understands all this.  Honestly, the questions asked lead me to believe I've answered incorrectly on my sold loan as it acts like I have a new loan.  

I have a similar situation as others where I refinanced last year.  The loan was then sold a few times and now I have 4 1098s.  Original > refi > sold > sold.  I need someone to walk me through how to answer the questionnaire correctly. Specifically when to answer yes/no on the original used to buy your property and when to answer yes/no on the HELOC or refinance of previous loan.  

When I answer no/no on these for my sold loans I get more questions about how I used the loan.  I've read to answer yes to it being the original loan on the sold 1098s but that just doesn't seem right either.  Now I'm seeing stuff about combining them all into one entry? smh so confused

You would think Intuit would have made this as simple as possible for dummies like me who don't understand this stuff.  

[AmyC]

Follow these steps:

1. Deductions and Credits:
2. Mortgage Lender -Original
3. Primary home
4. Continue
5. None of the above
6. Continue
7. Mort int
8. Principal
9. Date
10. Continue
11. Yes, secured
12. Continue
13. Points, continue
14. Most recent, no,
15. continue
16. original, yes
17. continue

1. Add lender for refinance
2. Primary home
3. Continue
4. None of the above
5. Continue
6. Mort int
7. Principal
8. Date
9. Continue
10. Yes, secured
11. Continue
12. Points, continue
13. Most recent, no,
14. HELOC/ refinance
15. Yes
16. Cash out - this is where things get messy, cash out for anything besides the house is not deductible interest -
17. yes if you took money out
18. No,
19. continue

1. add lender, sold first time
2. Primary home
3. Continue
4. None of the above
5. Continue
6. Mort int
7. Principal
8. Date - same as refinance above
9. Continue
10. Secured, yes
11. points, continue
12. most recent, no
13. continue
14. original no
15. heloc/ refi, yes
16. cash out  yes or no
17. continue

1. Add lender - final sold form
2. Primary home
3. Continue
4. None of the above
5. Continue
6. Mort int
7. Principal
8. Date - same as refinance above
9. Continue
10. Secured, yes
11. points, continue
12. most recent, yes
13. continue
14. original no
15. heloc/ refi, yes
16. cash out  yes or no
17. continue

@RotorJoe1

[RotorJoe1]

Ok, I've done all that multiple times but why does it ask me when I bought the home with each of the banks? Makes it sound like I have more than one home with different purchase dates.  I assume I put the same original date for all of these?  Then it goes on to ask me the ending balance or if I paid off the loan in 2021. Why isn't it pulling this info from the 1098? Do I just leave these two columns empty for each bank?

"What was the outstanding loan balance on Jan 1st, 2022 If you paid this off in 2021 enter the balance on the day you paid it off." Blanks for each bank

When did you make your final payment? If you did not pay off in 2021, leave this blank.

These questions make me think something is wrong and it wont let me leave it blank. It wants to know the outstanding loan balance as of the 1st of Jan and there's no easy way to know what that was from 1098s.