Multiple 1098s

[knicksfan]

I refinanced my mortgage in 2020, so I have received two 1098 forms (one from my previous lender, one from my new lender).

In TurboTax, I listed only one 1098 form and followed below instructions to combine the interest and property taxes. I did not list the 1098 from my new lender because I saw no point -- is this the correct way to do it?

If you refinanced last year, you'll need your 1098 from your previous lender and the 1098 from the lender you refinanced with to enter the details for this screen.

Follow these steps to enter your mortgage info:

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.
Grab a calculator and add the box 1 amount from each form and enter the total in TurboTax as Box 1 Mortgage interest.
Add the box 5 amount from each form and enter the total as Box 5 Mortgage insurance premiums. (If you weren’t required to pay mortgage interest, these boxes will be blank on your forms and you won’t enter anything here.)
Add the property tax paid from each form and enter it next to Property (real estate) taxes paid.
Next, finish adding info for boxes 2, 3, 7, and 11 using the 1098 for the original loan.

You could also have additional 1098 forms because your loan was sold by your lender, or you refinanced multiple times. Just 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 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.

[JotikaT2]

No, since your refinance was done through two different lenders, you would need to enter them separately and then indicate the loan that no longer exists was paid off.

Please see the following link for additional information on entering the refinanced mortgage interest expense.

Refinanced mortgage input

Multiple 1098 Forms

[ZKayC]

I sold a home and paid down the mortgage on primary home, then refinanced the balance on the primary home.  The loans were with the same lender.  TurboTax deluxe crashes every time after I enter amounts on the screen asking for end of year balances and paid off dates.  It crashes whether I enter the data on separate 1098's or in a combined 1098.

Both homes were primary residences. It took a year to sell the first home. 

[ReneeM7122]

Please delete your form(s) 1098 and start again.

How do I view and delete forms in TurboTax Online?

• Open or continue your return in TurboTax.
• In the left menu, select Tax Tools and then Tools.
• In the pop-up window Tool Center, choose Delete a form.
• Select Delete next to the form/schedule/worksheet in the list and follow the instructions.

Please follow these instructions to enter your 1098 forms:

How do I handle multiple 1098 mortgage forms?

If you have multiple 1098 mortgage forms, you’ll enter them one at a time. After going through the steps with the first one, you can add a lender when you get to the Mortgage deduction summary screen. (In the case of a refinance, it's best to enter the 1098 from your original loan before the 1098 from your refinance.)

But, if they're both from the same lender, and one of them has the “Corrected” checkbox marked at the top, enter the corrected 1098 and discard or shred the other one.

What do I do if I have multiple 1098s from refinancing my home debt?

If your total home debt is under $375,000 ($250,000 for married filing separate) there is nothing new for you to do in 2020. Enter each 1098 as you normally would.

Home Debt Over $375,000

Under tax law, you are limited on the amount of home interest you can deduct. The limit is based on the loan amount and date of the origination of debt. We want to make sure we calculate this correctly for you. 

If you refinanced last year, you’ll have a Form 1098 from your previous lender and one from the lender you refinanced with. You’ll need both forms. 

Follow these steps to enter your mortgage information:

1. Gather all of your 1098 forms related to your refinance (the form from your original lender and the form from your new lender)
2. Grab a calculator and add together the box 1 amount from each form. Enter the total in TurboTax as Box 1 Mortgage interest.
3. Add the Box 5 amount from each form and enter the total as Box 5 Mortgage insurance premiums. (If you weren’t required to pay mortgage interest, these boxes will be blank on your forms and you won’t enter anything.)
4. Add the property tax paid from each form and enter it in the Property (real estate) taxes box.

Next, finish adding info for boxes 2, 3, 7, and 11 using Form 1098 for the original loan.

What if I have more than two 1098s?

You should combine all of the 1098s directly related to the refinance and enter it as one 1098.  An example of this is if you refinanced two loans into one loan. Any 1098s not directly related to the refinance should get entered separately.

What if I paid points?

Points on Loans Paid Off in 2020: Enter the points on your 1098 you have started and mark you paid off the loan when promoted.

Points on Loans on New Loans: You will want to enter a separate 1098 to cover these points paid. When prompted, enter 0.00 for Boxes 1, 2, 5, and the Property (real estate) taxes box, and checkbox 7, as you’ve already entered the details on your first 1098. For Box 3, add the date in 2020 when the loan originated.

See this TurboTax article about mortgage statements.

@ZKayC

[ZKayC]

Thanks for the links, @ReneeM7122.  I have followed instructions of removing any entered 1098 data, both by deleting the form in  forms view and also by deleting the data entered on 1098 entry screen.  Before entering 1098 dat again, I first confirmed there are no data entries on the mortgage worksheet or on Schedule A.  Have even deleted .tax2020 data set and started completely over.   And TT deluxe continues to crash and reboot. I can go no further than the screen to enter amount and date data for loan  paid off in 2020 (the perm loan)  and Jan. 1  balance on refi loan.  I am clearly doing something incorrectly, but am not sure what.  One thing I have wondered about is whether TT using standard deduction in 2019 instead of schedule A tax return is an issue,  but that feels like a stretch even to me.

I have used TT since 2006 and have never encountered anything like this. But I have never had a build to perm bridge loan (2018) that converted to perm loan in 2019 when we moved into new house, sold original home (already paid for) in 2020 and paid down perm loan in 2020, and refinanced about a month later in 2020. 

I am at my wits end.

I would appreciate any other thoughts you have. And tried to  lay out the scenario above in case something comes to mind.  Thanks again.

[ZKayC]

I am using a dvd copy of TT Deluxe installed on pc running up to date windows 10.

[doug is also doug]

So if your refi debt is over $375k, you only enter your original loan 1098 but manually input the mortgage interest and property tax totals from both your original and refi 1098s? You leave the refi 1098 out? Thanks

[MayaD]

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.

Please check the link below for information on how to report multiple 1098s form.

What do I do if I have multiple 1098s from refinancing my home debt?

[Sammy23]

When adding the old lender and new lender information together when you refinance and the debt is over $375,000, which lender name do you enter into turbo tax? Do you use the old lender name or the new lender name to enter the combined data? 

[Sammy23]

Which lender do you list on the 1098 entry form, do you list the original lender or the new lender you refinanced with? I understand you combine the information, but under which lender and does it even matter?

Thanks!

[DaveF1006]

It really doesn't matter which lender you list because the lender's information does not get reported to the IRS.

[test29]

Hi Maya,

I am running into a situation where I think people who own multiple homes will face same issue.

Here is my case

I own a home since 2017 then I purchase 2nd home and move to 2nd home in 2020. Thus I got two mortgages, one for the 1st home with 750,000 and one with 2nd home with 800,000 starting Oct 2020.

In 2020, I paid $20,000 mortgage interest for 1st home, and $5,000 for 2nd home since Oct 2020.

If I enter both 1098 in turbotax online, turbotax will take both 1098 and do a simple division which I believe is

(20,000+5000)/ (750,000+800,000) * Federal limitation (750,000)  = $12,096 deduction which is incorrect because based on IRS publication, it should take the first mortgage for interest deduction

https://www.irs.gov/pub/irs-pdf/p936.pdf

which should be $20,000 deduction.

Is this a known issue? It sounds like it will leave a lot of money on the table for multiple home owners. 

I am also wondering if the issue is fixed, and I enter two 1098 as I should be doing, when filing state tax, will Turbotax be smart enough to check state mortgage interest deduction limitation and apply the different limitation e.g. for California, the allow deduction mortgage amount is 1 million. So my expectation for California deduction is $20,000 + $5000 * (1million - 750,000) / 800,000 = $21,562.5

Last, please correct me if any of the expectation or logic is incorrect, and how it should be filed. If the expectation is correct, and it is Turbotax issue/limitation, how can I adjust it for 2020 or is there a workaround for it? Also will it be fixed on 2021 as I would like to know whether I should make a purchase and continue to use Turbotax online next year? preferably I want to keep using it as all my files are stored with Turbotax online.

Much appreciated and hope we can clear the issue. 

[ZKayC]

hi @test29 ,

I realize you want an answer from a specific TT expert- which I am not.  I want to share this year’s experiences  with multiple 1098’s. This is the first issue I’ve had with TT

 after many years as a satisfied customer.

I finally resorted to entering some of the data directly on the TT form. I did this to circumvent a problem with TT continually CRASHING whenever  I reached a certain point when entering 1098 data using both guided and choosing the section entry.  I have submitted logs to TT, posted in the forum, did get some forum responses but don’t think this was really looked at because I heard nothing back about this problem from TT directly.

I have worked for an accountant and a tax prep company for a couple of years in the past and have done my own taxes for many years. I read IRS docs and am confident in the data I entered and in my completed/submitted tax return.  

I also worked in the software development world in Quality Assurance for many years.  And think there is a possible problem buried somewhere in this area of code.

Good luck with getting your issue resolved.

[test29]

@MayaD  do you have an answer above or can you share the feedback to Turbo Tax product team? it looks like it affects all home owners with multiple units, causing loss for those users while charging them for the product. There should be a liability from Turbo Tax to ensure the tax filing is accurate and correct.