turbotax icon
turbotax icon
turbotax icon
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

Mortgage interest deduction issues

I am having 2 issues regarding the mortgage interest deduction that I could use some clarification on.

 

1. We have a mortgage originated in 2016 for over $1,000,000.  I understand that the mortgage interest is deductible up to the first $1,000,000 of debt.  The TurboTax instructions say to follow the IRS 936 guidelines and enter the adjusted interest, which for us is around 70% of the actual interested we paid. However, when I do so, TurboTax ends up deducting ~70% of the already adjusted value.  If I enter in the full amount of interest paid, TurboTax says our deductible interest is around 70% of the full amount, which is what I expect.  Is TurboTax performing the adjustment automatically?  Are the instructions simply incorrect/misleading?

 

2. I later encounter a screen for the CA mortgage interest adjustment.  Since our loan originated in 2016 (prior to the 2017 transition to a $750,000 limit), we are still subject to the older $1,000,000 limit.  As such, I didn't think we would qualify for the mortgage interest adjustment.  However, TurboTax says that we are allowed a $3,000 adjustment.  Is that correct?

 

Thanks for any help.  Sorry for the long questions.

Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

1 Best answer

Accepted Solutions

Mortgage interest deduction issues

1. I printed out the resulting forms and confirmed that TurboTax is automatically computing the correct limited deduction.  The Schedule A and Deductible Home Mortgage Interest Worksheet have the expected values and calculations.  I think the instructions were misleading.

 

2. Comparing the Schedule A Deductible Home Mortgage Interest Worksheet and the CA 540/540NR Deductible Home Mortgage Interest Worksheet, it appears that the $3,000 difference is due to an additional $100,000 allowed for home equity debt that raises the qualified loan limit to $1,100,000, compared to the federal limit of $1,000,000. 

View solution in original post

23 Replies

Mortgage interest deduction issues

1. I printed out the resulting forms and confirmed that TurboTax is automatically computing the correct limited deduction.  The Schedule A and Deductible Home Mortgage Interest Worksheet have the expected values and calculations.  I think the instructions were misleading.

 

2. Comparing the Schedule A Deductible Home Mortgage Interest Worksheet and the CA 540/540NR Deductible Home Mortgage Interest Worksheet, it appears that the $3,000 difference is due to an additional $100,000 allowed for home equity debt that raises the qualified loan limit to $1,100,000, compared to the federal limit of $1,000,000. 

Mortgage interest deduction issues

My interest for this past year on an existing balance of under $230,000 is  $7396.  This amount I entered, but does not show as a deduction on the final calculation where last year I was allowed the deduction of $8611.

Mortgage interest deduction issues

waiting on response to query why I am not getting a mortgage interest deduction.

 

Mortgage interest deduction issues

still waiting for query why I am not getting mortgage interest deduction. 

Mortgage interest deduction issues

Is any boy there

Cynthiad66
Employee Tax Expert

Mortgage interest deduction issues

There is a known problem with Home Mortgage Deduction.  TurboTax is working to fix the problem and the many other issues. There are many changes due to the CARES Act that require software upgrades.  We have not been given an  expected date for the fix yet.  Please check back often to see if you can file your return.

 

OR

 

In the meantime, you can try this work around.  You did not provide the details of your Mortgage situation and therefore I am giving you a general work around that might help.  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. 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

Mortgage interest deduction issues

Will the fix be an automatic update to the software? I am having similar issues. $8426 in interest paid that has always been deductible does not calculate as the deduction being taken. Any idea when the update will go through?

JamesG1
Employee Tax Expert

Mortgage interest deduction issues

TurboTax Online is updated automatically. In TurboTax Desktop versions, click Online / Check for updates in the upper left hand corner of the screen.

 

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

 

How many 1098's and how many properties are you reporting?  See this TurboTax Help.

 

Also, perhaps this will be helpful.

 

In TurboTax Online Deluxe, I was able to enter a home loan on an IRS form 1098 and the second IRS form 1098 for the refinanced loan.  For the refinanced loan, I used the balance of the loan at the time of loan pay-off. 

 

I was given the full mortgage interest deduction and the Home Mortgage Interest Limitation Worksheet did not add the two mortgage balances together.

 

The entries were made at Federal / Deductions & Credits / Mortgage Interest (Form 1098).

 

Entries for the original loan

 

Do any of these uncommon situations, I entered None of these apply.

Did you pay points, I entered I’ve already deducted.

Was this loan paid off or refinanced, I entered Yes.

Is this loan a home equity, I entered No, this is the original loan.

 

Entries for the second loan

 

Do any of these uncommon situations, I entered None of these apply.

Did you pay points, I entered I didn’t pay points.

Was this loan paid off or refinanced, I entered No.

Is this loan a home equity, I entered Yes, this is a loan I’ve refinanced.

So what type of loan is it? I entered A mortgage loan that I’ve refinanced.

Have you ever pulled cash? I entered No.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
LRSCRS1
New Member

Mortgage interest deduction issues

I understand that Turbo Tax software is not working correctly for mortgage interest deduction.

I am among your customers wherein your software is NOT properly calculating my mortgage interest.

Rather it is significantly under reporting the proper amount for Itemization.

When will this software error be fixed????

Rather than seeing your tv commercials for expert help and Free Free Free, how about fixing the problem and help  me who paid for your software.

 

KATHY71
New Member

Mortgage interest deduction issues

I REFINANCED LAST YEAR AND HAVE INTEREST TOTALS FOR BOTH VENDORS

PNC BANK $3,581.06 AND THE MONEY SOURCE INC $5409.54 A TOTAL OF $8990.60. WHEN MY RETURN WAS PROCESSED IT ONLY PICKED UP $3581.06, HOW DO I FIX THIS?

KATHY71
New Member

Mortgage interest deduction issues

WHEN I WENT THRU THE STEPS FOR THE INTEREST I ENTERED BOTH MORTGAGE INTEREST AND IT ONLY PICKED UP PNC BANK FOR 3,581.00 SHOULD I JUST PUT THE TOTAL FOR BOTH

DaveF1006
Employee Tax Expert

Mortgage interest deduction issues

Yes, put in the total for both.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
jd5504
Returning Member

Mortgage interest deduction issues

mortgage interest does not lower federal tax

JotikaT2
Employee Tax Expert

Mortgage interest deduction issues

If the total amount of your mortgage balance exceeds $750,000, then the amount might be limited.  

 

Mortgage interest deduction limits

 

Or are you able to itemize your deductions or is your return being calculated using the standard deduction?

 

Standard deduction versus Itemized deduction

 

Standard deduction for 2020

 

To determine what deduction is being used on your return, log back into TurboTax.

  1. Go back to your Deductions & Credits Screen. 
  2. Scroll down to the bottom and select Wrap up Tax Breaks
  3. You should continue through the screens until you see the following screen: 

Itemized vs standard

 

TurboTax will use the deduction that yields the highest tax benefit for you.

 

@jd5504

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Use your Intuit Account to sign in to TurboTax.
By selecting Sign in, you agree to our Terms and acknowledge our Privacy Statement.
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies