TurboTax Premier Online is miscalculating (over deducting) federal mortgage deduction

[DavidCA]

I have a loan over $1m which was refinanced twice in 2020.

The first refinance (refinanced and paid off in 2020) included points, not shown on 1098.

I've merged three 1098s into one and then added a second with zero for most boxes and the correct figure for the points not shown on 1098.

TurboTax figures the federal tax incorrectly and the CA state tax correctly.  Then, it puts in a positive adjustment for points and negative adjustment for interest in the state return.  The points are correct on federal and state, and the (negatively) adjusted interest results in the correct final interest figure on state, but the federal interest is (interest + non-1098 points), which is the reason for the negative adjustment -- this is what made me dig in and spot the double-count of points on federal.

i.e. Schedule A, item 8a, interest and points on 1098, includes the points which are *NOT* on the 1098 (portion attributable to $1m of refinanced pre-2017 loan balance).

Schedule A, item 8c, *ALSO* includes the same portion of the points which are *NOT* on the 1098.

CA Adjustments 8a is the negative adjustment from ($1m loan balance worth of interest and incorrectly included points) to ($1.1m loan balance worth of interest only).

CA Adjustments 8c is correct - points attributable to $100k of loan balance.

Help?!  Taxes are due tomorrow.  (Also: how do we trust that TurboTax is doing the right thing with hundreds of stock transactions, which I can't hand-calculate, when it is so obviously doing the wrong thing with such a trivial thing as mortgage interest?  The stock data also looks very questionable but there's no way I'm going to redo it all by hand, by tomorrow.)

[DavidCA]

Intuit had an estimated support hold time of 1 hour.  I called.  Held over 2 hours, still on hold, but I'm not going to hold indefinitely.

I made TurboTax calculate my correct Federal refund by entering half the actual points value, so it counts half of it in two places (i.e. has the correct total, but incorrect line items), and used that figure to e-file an extension via TurboTax.  Fortunately, I'm due for a refund so an extension is relatively painless with the information from the completed forms.  It seems like the best option - even if I do get through and Intuit can see this issue, they're unlikely to patch and deploy a corrected version of TurboTax Online in the next day. 

[DavidCA]

I never got anywhere with Intuit on this (I filed for the extension so I could continue to work on it, but never managed to get a resolution).

I contacted them again this afternoon, the person I spoke to put me on hold to talk to a supervisor, then the call dropped and when I tried to contact them back, their support center was closed for the day.

Does anyone have any other way to report such obvious miscalculation bugs to Intuit?  Do I just have to keep calling them?

It seems wrong to knowingly file an incorrect tax return and then depend on Intuit's guarantee that they will pay penalties and interest for their mistakes.

[DavidCA]

I called support again today, and they "solved" this for me.

Here's what happened:

• they tried to transfer me to a team to help, but I refused to pay extra for 'live'
• they accepted that my issue was a bug; they gave me a license code for the desktop version of TurboTax
  • they advised I would have to fix in 'forms mode', but they were wrong, as per below...
• I downloaded the desktop version (following their instructions to first create an empty tax return and select my state) and downloaded my tax2020 file from online
• the wrong tax figures displayed, matching the online figures
• I clicked into the Mortgage Interest section of Deductions & Credits
• I clicked through and made no changes, just selecting some items which it didn't know my previous selection for
• it updated to the correct tax figures, matching exactly the calculation I had done to file estimated taxes

So, this is a tax calculation bug in TurboTax Premier Online, and TurboTax Premier desktop edition does not have the same bug.

[DavidCA]

Although, it's not really solved.  The tax figure is correct, but the points which should be on line 8c, are instead on line 8a.  At least they're not duplicated.  I think I'll use forms mode to move them to the correct line and call it done.

[DavidCA]

In fact, Forms mode won't let me correct the "Schedule A".  It sends me through to the "Home Int Wkst".  There, I enter the correct data, and then TurboTax goes and miscalculates Schedule A.  There seems to be no way to get points to show up on line 8c and not be duplicated on line 8a, resulting in double the correct deduction.  :(

[DavidCA]

OK, I seem to have finally solved this!

I know I said that before and it turned out to just be another glitch.

This time:

• continued on from the data file above where had the duplicated points and couldn't edit Schedule A directly
• instead, I found I could edit the 'Mortgage Interest Limited Smart Worksheet' on the form 'Tax & Int Wks'
• there, I corrected entry 'A1' to the correct figure (the adjusted 1098 interest,  which matches the figure which was there minus the figure on 'C2')
• now,  Schedule A figures 8a and 8c are correct!

[DavidCA]

Of course, not a 100% solution - after this, my CA state refund was smaller than it should be :(

I just had to go to 'Schedule CA' line 8c and replace the negative figure with (in my case, as federal is based on $1m and state on $1.1m for me) 10% of the figure in the first column.

Then, my California and Federal figures are correct!  I think I finally have something I can file!

[1q2w3e]

I am dealing with this now - a negative number for my interest.  it looks like it took the first 1098 and put it "-" before it, instead of combining my multiple 1098 forms.  After noticing this, I went back to check the 2020 tax returns, and son of a gun!!  It COMBINED the 1098 which then triggerd the 1MM limits, and in turn reduced my refund.   HOW IS THIS STILL A PROBLEM 2 YEARS LATER???

[RaifH]

The Mortgage Interest Worksheet may not be calculated correctly because the Box 2 Outstanding Mortgage Principal amounts on Form 1098 are adding up to more than $750,000. This is lowering the deduction that you may be eligible for if you are itemizing deductions. The finalized worksheet is not estimated to be available until February 17, 2022.

For more information on the limit to mortgage interest deductibility, see IRS Publication 936.

@1q2w3e 

[1q2w3e]

That’s obviously a mistake since they shouldn’t be summed.  They represent the same mortgage.  This doesn’t require a new tax form, especially since the desktop version of the software doesn’t make this miscalculation.

[AliciaP1]

If you refinanced or had your loan sold to a new lender last year, you’ll have a Form 1098 from your previous lender and one from the new lender. You’ll need both forms. 

Follow these steps to enter your mortgage info:

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 insurance, 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.

@1q2w3e