Refinanced mortgage 1098 messing up deduction from original loan

[nishi4939]

in my case I did not any reflection or update on my taxes as a result of entering my 1098s . I also refinanced on a primary home less than 750K.  What do we do?

[85tiger]

Same issue persists with TT not working correctly.  Are they going to fix this or not - is is April 24 now folks.  Either your product is worth paying for its not?????

[STravlos]

@Cynthiad66 Thank you for this! It works. Had a caller on TTL just yesterday. I assisted using this, because I know it has been an issue on these refi's. At the end in the error check only 1 thing popped up, wanted the Beginning balance on the 1st 1098 Mortgage interest loan (the one that was paid off / transferred to another lender/ refi'd) so I had the customer enter that outstanding mortgage principal amount shown on the 1098 as the beginning balance since the now outstanding mortgage balance was input as $.00 on the 1098 entry. It cleared the error. Mortgage interest deduction was correct & all was good to go. Thanks again for posting this. From Stravlos -TE, FS, TTL

[FlyawayKnight]

Is this resolved yet? Still counting refied mortgage as total. 

As of May 10, 2021

[85tiger]

I would not say resolved but I guess this is the plan.  I think this is the best way I can determine to do it and we're running out of time so I'll do it the way I think is correct based on the responses here.

Still disappointed that this was not resolved by the TTax people we pay to do this so we have to just make a guess on our own with no support..

JS

[FlyawayKnight]

I dont really like the idea putting "outstanding" as 1(cant put in 0), it would show up as $1 on "Beginning Balance" field, its really wield.

[ai2020]

+1 This is really frustrating. Is the advice to put $1 on the remaining principal balance of the first loan that has now been paid off?

I am considering filing an extension and finding a CPA.

[FlyawayKnight]

This article from Intuit talked about combining multiple 1098 as one, https://ttlc.intuit.com/community/loans/help/what-do-i-do-if-i-have-multiple-1098s-from-refinancing-....

But I am still confused about which Lender name should I put, the original or the new one? (I have a loan refied last year)

[shd]

I used the $1 method and mailed out my tax returns yesterday on the deadline. In my case, both my original loan and the refi loan were under $750k. So the entire interest amount from both loans plus amortized points were fully deductible. The total amount is correct on the tax form. So I doubt it will raise a flag with the IRS. Besides lenders supply them with mortgage statements.

It's very disappointing that TT didn't address the issue by updating their algorithm to correct calculate the deductible interest amount. I just hope there weren't many unsuspecting TT customers who had less interest deducted on their returns because of the bug. If one of my loans were more than $750k, I would have had to find a more sophisticated solution. The burden should rest on the customer. 

[85tiger]

I sent mine in too for better or worse - yes, disappointed in TT for not addressing this issue.  Doesn't give ma lot of confidence in what else maybe I didn't know and didn't know I didn't know it.....

[LawrenceDong]

I reviewed the articles mentioned in TurboTax after updating to the latest software.

I used $1 method too. I input the correct info in the first mortgage, and in the 2nd refinance mortgage, I input $1 at box 2. Then I computed and input the correct deductible interest on my own.

A small tip, if your first mortgage is more than $750k, and your mortgage date is before Dec 15, 2017, then your mortgage interest deduction limit is still $1MM, and this limit also applies to your 2nd refinanced mortgage.

I believe many customers who are not sensitive to numbers will not notice these errors and pay more taxes than required. I really hope TurboTax can make these special cases into their algorithm, so customers don't need to manually do these tricks! 

[85tiger]

Well that is interesting - so you mean as long as the original mortgage was prior to 2017 the 1M carries over to new refinances done in 2020?

[GSD77]

Might look at my posts for work around from last year.  Hoping TurboTax fixed this year, but just tried a dummy mortgage and refinanced mortgage both below limitation and. It didn’t work. Cannot believe TurboTax didn’t fix this continuing problem.

[MK1996]

Anyone still having this issue for the 2021 Tax Year? Same issue. Refinanced a 2013 loan in 2020 and since then can't get the interest deduction up to 1,000,000 as the case should be.  Have to incorrectly put the loan origination date as that of the original loan and not my 1098 from the 2020 refinance.  

[MK1996]

Yes.