Adding multiple 1098

[jyeh74]

I have two 1098 for my primary.  It is because I refied so I am receiving two 1098 from the same bank.  When I enter the first 1098 with mortgage interest of $20k, my outstanding mortgage principal of $825k, it says my federal tax due is $4k.  When I enter the second 1098 with mortgage interest of $5k, my outstanding mortgage principal of $800k, my federal tax due now increases to $6k.  In the past, whenever I enter more mortgage interest (multiple 1098s), I am increasing my deductions, and my federal taxes due will decrease.  

It does not make sense that I owe $4k when my mortgage interest is $20k but I owe more, $6k when my mortgage interest is $25k.  I put that it is a heloc or refinance, not original mortgage.  It asks me if I took out cash and I say no, however, I think there is a glitch because if I go back and say yes, then it will decrease my federal tax due and increase my state refund.  If I go back to the screen where it asks me if I took out cash, and this time I say no, then it doesn't change back my refund amount.  It appears to be a system glitch.

Something isn't right.  I'm going back and playing with it and if I delete the $5k, my state refund will increase by $500.  If I add back the $5k, my state refund will decrease by $500. Can someone explain what is going on for TT Premier 2020?

[PattiF]

There is a know problem at this time with this issue.

Some TurboTax customers are experiencing an issue with their Home Mortgage Average Balance. This can cause the Home Mortgage Interest to be incorrectly limited.

If you're experiencing  the issue above,  please go here to receive email notifications when any updates related to this issue become available.

[jyeh74]

TT emailed me today and said that the issue is resolved.  They asked me to install the update which I did.  I installed the update and tried again.  The issue is still there.  As I add more 1098, my federal refund decreases.  Help!

[ReneeM7122]

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.

[rls4655780]

i would like to review the standard deduction worksheet even if i didnt take the SD>

[LinaJ2020]

If you have more than one 1098 form, I will recommend you to combine all 1098 forms and enter as one. I am attaching a TurboTax link for the instructions how to do claim your mortgage interests.  Click here:

Multiple Form 1098s

For tax years prior to 2018, your mortgage interest deduction is generally limited if all mortgages used to buy, construct, or improve your first home (and second home if applicable) total more than $1 million ($500,000 if you use married filing separately status). Beginning in 2018, this limit is lowered to $750,000.  For more information about the mortgage interest deductions, click here: Mortgage Interest deduction

[jyeh74]

@LinaJ2020 , ReneeM7122 already sent the same link that you did.  It did not answer all of my questions.

Let's say that the first time the loan originated was in 10/01/14 (box 3)

First 1098 in 2014 box 1 = $x

First 1098 in 2014 box 2 = $950k

First 1098 in 2014 box 3 = 10/01/14

I am not clear what you mean by "Next, finish adding info for boxes 2, 3, 7, and 11 using Form 1098 for the original loan".  What does the original 1098, back from 2014 have to do with this?  Do you mean the first 1098 sent in 2020 or do you mean go all the way back to 2014?

The first 1098 isn't the FIRST origination date since I have refied multiple times.  Technically, the first origination date is 10/01/14 when the loan was first obtained.

First 2020 1098 box 1 = $20k

First 2020 1098 box 2 = $825k

First 1098 box 3 = 06/01/2019

Second 2020 1098 box 1 = $5k

Second 2020 1098 box 2 = $800k

Second 2020 1098 box = 01/01/2020

In this situation, are you suggesting that I

- enter $20k + $5k = $25k for box 1.

- enter $825k for box 2 or enter $950k for box 2?

- enter 06/06/2019 for box 3 or enter 10/01/14 for box 3?

[KKBRODY981]

We did our refi in 2020.  The first loan was 366k.  We refinanced with the same lender and took cash out.  The new loan is 430k.  Do I still need to combine the 1098 forms?  If so...How do I combine box 2?  Do I add them together which would make my outstanding mortgage principal 796k?  That doesn't make sense to me...Or do I just put the 430k?  Very confusing...

[JotikaT2]

You will combine the mortgage interest amounts listed in box 1. 

You will not combine the outstanding mortgage balance.  You will enter the outstanding loan balance as of December 31st as that would be the only loan still outstanding at the end of the year.  The other loan no longer exists.

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

Refinanced mortgage input

@KKBRODY981

[KKBRODY981]

thank you!  That helps!  One last question on this.

first 1098 - box 3 is 7-1-2019 and second one is 12-21-2020

Which date do I put?

[JotikaT2]

You will use the latter date since this is the loan still in effect at the end of the year. 

[KKBRODY981]

The turbo tax pop up box next to this item says to "finish adding info for boxes 2,3,7, and 11 using the 1098 FOR THE ORIGINAL LOAN."  So I would still put the loan origination date of 12/21/2020 instead of 7/1/2019?  

It is also stating that I cannot deduct my loan interest because we took cash out to pay off other loans?  The majority of the interest ($14,110.44) was paid prior to 12/21/2020 and only $372.57 paid after 12/21/2020.  It doesn't make sense to me that we cannot write off what we paid prior to the refinance.  If i were to enter these two 1098's separately then would it allow me?

[WendyN2]

No, as you paid into the original loan, hence increasing your equity in the home (and thus being able to take out a HELOC or refi) - since you used the money to pay off other debts, this is disallowed for interest deductibility and has been for years. It is all in how you answer those tricky little IRS questions that exist in every tax prep software system. 

[hjhfsadf]

turbo tax still hasn't fixed the simple calculation error.

they closed the other thread where everybody is pointing this out.

I called today for a third time. they pointed me towards a work around that only somewhat follows IRS guidelines.

very frustrating. Seems like their programmers can't read and follow IRS publications: 

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

TT seems more interested in their filing fee than getting my taxes correct.