Mortgage Interest Deduction Limits

[rlm3]

During Federal Review, I'm being flagged for Limits on my Mortgage Interest Deduction.  If have three mortgage loan deductions.  The third loan was a complete refinance of the second loan.  In the Deduction and Credits section, I answered NO to the limitations question on whether my loans exceeded either the $1M pre-2017 and $750K post 2017 thresh holds.  When I went back to the Deductions and Credits section, the program had changed my answer to yes.  I answered NO again, but the same thing happed.  Is this a flaw in the program?  How do I deal with it?

[JohnW222]

There are no known issues with the Mortgage Interest Deduction.  Your best bet is to delete the Mortgage Interest data and re-input it.

In TurboTax Online:

Click the Federal tab on the left, then

Click Deductions & Credits, then

Click Your Home, and finally,

Mortgage Interest and Refinancing (Form 1098) Revisit.

[rlm3]

I beg to differ with your answer.  After posting my question, I discovered several others that point to my exact issue; including one that points to this issue going back as far as FY18.  Care to explain that?

[balegs]

I'm having issues with what appears to be a bug when trying to allow deductions on my mortgage. It asks if certain situations apply to me (eg: debt > $1mm and acquired after 12/2017) and I check NO. Then when I save it reverts the answer back to YES. So it wipes out my mortgage interest deductions. I've tried deleting the entries and re-entering. I've also tried putting the mortgage balance at $1 and showing the mortgage had originated in 2000 (way before 2017). So please advise what's happening to the program.

[jake93]

This is definitely as issue. I have the desktop program and have sent my tax file to TT as requested. I have not received any kind of response from TT.  There have been 2 workarounds suggested by other users. 

The first is to go into the actual form/worksheet and check the “No” box.

The second is to answer the tax limitation question “No”, do not click continue, save the return, back out of the program, reopen the program and manually continue your return at the next step.

I have actually tried both solutions and both cleared all the error checks and were deemed ready to efile. I have successfully efiled using the second work around. My return has been accepted and approved by the IRS and state.
TT definitely needs to fix this problem. I don’t pay for tax software to have it calculate my taxes incorrectly. In my case, the error causes a taxes due amount of over $2500 vs a refund of over $500. Its unacceptable. It is doubly irritating to have TT repeated say “there is no bug”. I guess People can’t rely on TT to “Get your maximum refund, guaranteed”.

[Peter62]

Hello Jake93,

I've also had a this problem but only this year.  I'll try your ideas and hopefully this will work!  I agree, this is a software bug and should be looked at.  As many year users of TT our carryover data is crucial to accurate filing, more than the price of the annual software.

Kind regards

Peter62

[miyamotos]

As of today 2/21/20 - TT has NOT fixed this issue.  I am running into the same problem.  This is a big issue and involves a lot of money!!  We do not pay TT to have to 'work arounds' !  Get your act together!!  This is a problem!! 

[tjucla98]

Hi Miyamotos, 

I am also having the same issue.  I tried tweeting TurboTax for support and they immediately responded and asked me to use this link to call for support / request a call: https://t.co/5hQt8uKpKX?amp=1

Once they called me back I explained that I researched this issue on the TT boards and found that this is a pretty well known issue and that there will be a bug fix in place by Monday 2/24/2020.

Unfortunately no immediate workaround (not ideal) if you're using TT download for OSx.

[VictoriaD75]

There is a workaround for this. 

For desktop versions:

• In Forms view, locate and click on Tax & Int Wks on the left from the forms list
• On the form, scroll to Mortgage Interest Limited Smart Worksheet
• Click on NO to the right of the question, Does your mortgage interest need to be limited

For online versions:

• Under Deductions & Credits, expand the menu for Your Home
• Click Start/Revisit next to Mortgage Interest and Refinancing (Form 1098)
• Click through until you get to a screen that says Do any of these situations apply to you? Mark Yes.
• On the next screen, take out the zero.
• Click back and choose No.

[kristenn04]

Today is 2/26/20. Still no solution. I am having the same issue after entering a refinanced loan. This is clearly a problem. I think it is adding all of the loans together somehow. One question I did have when entering the 1098 forms is how to answer the question: is this loan refinanced or the original loan ? I had 3 "original loans" (one of my original 2 was sold to a different lender prior to my refi), so I selected "original loan for the first 3, then "refi" for the newest loan. Wonder if that is messing things up? Should I have selected differently? Everything I've seen says I did it right, but it makes me wonder. Somewhat happy to hear I'm not the only one having this problem this year, but wish they would fix the bug. 

[VictoriaD75]

Have you tried the workaround list above? What version of the software are you using?

[Anonymous]

I agree. I am having the same problem after having deleted and re-entered the deductions three times. It appears that the program is adding the original loan and the refinanced loan amounts making it a requirement for the limitation due to an excessive of $750,000 loan amount,. When is this going to be corrected?

[Anonymous]

Thank you. Great idea. I am going to try it.

[KrisD15]

Do not alter the 1098. Enter the 1098(s) as reported. Box 2 should not be blank. Box 2 is the balance of the loan on 01-01-2019 OR the balance on the day the loan was taken out in 2019. Answer the interview questions carefully.

If you get an error concerning the balance, please follow these directions:

ONLINE USERS:

Please go back to the Home Mortgage Interest section:

Click Federal on the left side-bar

Click Deductions & Credits along the top

Scroll down to “Mortgage Interest and Refinancing (Form 1098)” Click Edit/Add

Scroll down the “Here’s your 1098 info” screen and click Done.

Next screen asks “Do any of these situations apply to you?” Select “Yes, one or all of these situations apply to me.” and Continue.

On the following screen, you will see the “Original amount”.

Enter the amount you can claim as a Home Mortgage Interest deduction in the “Adjusted amount” box. The Adjusted amount cannot be larger than the original amount or you will receive an error when trying to file. Instructions on who needs to adjust interest and how to calculate are available by clicking the blue “Help me figure this out” link.

DESKTOP USERS:

Go into Forms (top right)
Enter the amount on Tax & Int Wks
Mortgage Interest Limited Smart Worksheet section
Line A2

OR

Step by Step

Federal

Deductions & Credits

Mortgage Interest, Refinancing and Insurance Click Update

Click Done

Click Yes, one or both of these situations apply to me. And Continue

Enter the Adjusted amount and Continue

[mec405]

To Jake93-

After spending almost 2 hours on the phone with TT I decided to google and found you fix.

Thank you-yours worked.