TurboTax is incorrectly combining mortgage loan principal from multiple 1098 forms due to a mortgage service transfer (California). How do I fix this?

[DianeC958 · Accepted solution]

When you put in the information from your 1098 forms into TurboTax Box 2 asks you the balance on each loan as of 1/1/2019.  For any loan that began in 2019 that balance should be $0.  

Please review your entries in Box 2 only one should have an amount greater than $0 for Box 2.

[soniqfreq]

I'll give that a shot.  Thanks. 

[soniqfreq]

Hi @DianeC958. So after I enter $0 in Box 2, when I get to the federal review, it says I have an error and need to enter the beginning principal for that loan.  When I do, it  erroneously doubles my debt again and puts me over the limit on my California return.  Should I put $0 on the error review screen also? 

[Allenusc]

If I enter $0 for Box 2 on TurboTax for either 1098, it gives me an error and will not allow me to move to the next step.

Therefore the first original loan (sold in February 2019) has a balance of $590K, while the new loan that I've been paying since March 2019 has a balance of $0?

[KrisD15]

NO

If the loan was moved to a different lender in 2019 and you have two 1098's to enter:

First, delete both 1098's.

Enter the older loan first, enter box 2 as it is reported, 

THERE WILL BE A SCREEN ASKING "WAS THIS LOAN PAID OFF OR SOLD IN 2019?"  CLICK "YES" 

(this screen will not appear if you go back and edit)

Continue through the interview

Next, enter the second 1098

If box 2 is blank, enter zero, otherwise enter what is in box 2. 

Continue through the interview questions. Do not select that it is a HELC. 

Since you clicked that the first 1098 was paid off or refinanced with a different lender, the mortgage balances (box 2) will not be added together. 

@Allenusc

@soniqfreq

[soniqfreq]

Hi @KrisD15, I followed your steps ("Was this loan paid off or sold" = YES), and in the 2nd 1098 entered what is in Box 2 and I still get the same issue on my California return.  It doubles the debt pushing me over the state limit (>$1 million) and forcing an "adjustment" of thousands of dollars. 

[KrisD15]

When you entered the second 1098, the program should have asked if this second 1098 was a HELC, did you say NO.? 

[soniqfreq]

It did ask and I said no. 

[andrewnagel]

I am seeing the exact same issue, this is a bug in turbo tax that would have cost me more than $2,000 if I had not caught it.  This NEEDS TO BE FIXED yesterday.  If I can't trust TurboTax to get such a massive screw up fixed quickly there is no point in ever using it again.

[TNAKNAK]

I am encountering the same issue. After entering the first 1098, I never got a question of whether the loan was paid off. Only if it was a HELOC or a refinanced loan, to which I answered yes. This is a TERRIBLE glitch on Turbo Taxes part! I went from getting a return of $4K plus to owing $200!!! and seeing that my $24,000 in mortgage interest was not counted AT ALL as a deduction!

[andrewnagel]

It also appears that this has been a known bug for at least 3 weeks with no resolution.  This is simply not acceptable.

[andrewnagel]

In what world is "Solved" the right status for this bug?  The work around is to inaccurately report information no your 1098 to the IRS which I am going to call not great tax advice.

[Allenusc]

Mortgage transfers is a very common occurrence , however, TurboTax is not program this into the software correctly without doubling on the total balance.

The better way is to correct the software code, but here we are asked to manually override the software errors, yet the data we enter will not exactly match the 1098s.

[Allenusc]

Mortgage transfers is a very common occurrence , however, TurboTax did not program this into the software correctly without doubling on the total balance.

The better way is to correct the software code, but here we are asked to manually override the software errors, yet the data we enter will not exactly match the 1098s.