The bank claims this is correct because the HELOC is still in the draw period. If this is correct, I’d this the amount I should enter on my tax forms for calculating permissible interest for itemized deductions?
I went back and looked at my HELOC 1098's during the draw period back in 2017 and they show the balance of the money I took out as of January 1 not the credit limit amount. It seems that entering the credit limit amount as the beginning balance will skew the average balance against you when figuring the amount of interest that is deductible. Remember that the money drawn form the HELOC has to be used to purchase or significantly improve you home.
I can't advise you on what to do as far as entering you HELOC 1098 into Turbo Tax, just letting you know what my HELOC situation was.
Use your Dec 31 actual amount of credit used. The information you enter goes to a worksheet to figure out the allowable mortgage interest which is based on actual values not possible values. Enter your information so the worksheet can correctly calculate your allowed mortgage interest. The final answer goes to Sch A mortgage interest and that one number is all the IRS sees.