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Level 3
posted Jan 31, 2020 10:15:26 PM

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

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1 Best answer
Expert Alumni
Feb 1, 2020 5:12:46 AM

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.

 

 

24 Replies
Expert Alumni
Feb 1, 2020 5:12:46 AM

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.

 

 

Level 3
Feb 1, 2020 8:29:45 PM

I'll give that a shot.  Thanks. 

Level 3
Feb 1, 2020 8:51:57 PM

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? 

Level 2
Feb 3, 2020 1:45:04 PM

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?

 

 

 

Expert Alumni
Feb 3, 2020 2:30:21 PM

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

Level 3
Feb 5, 2020 8:45:27 PM

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. 

Expert Alumni
Feb 9, 2020 1:21:08 PM

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

Level 3
Feb 9, 2020 2:35:30 PM

It did ask and I said no. 

Level 2
Feb 19, 2020 6:04:09 PM

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.

New Member
Feb 19, 2020 6:21:20 PM

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!

Level 2
Feb 19, 2020 8:10:35 PM

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

Level 2
Feb 20, 2020 9:56:57 AM

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.

Level 2
Feb 20, 2020 10:14:05 AM

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.

 

 

Level 2
Feb 20, 2020 10:16:05 AM

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.

Level 2
Feb 20, 2020 10:18:59 AM

I am going to go out on a limb and guess that in an audit the IRS is not going to accept TurboTax had a software bug as a valid reason for inaccurately reporting the correct values on the 1098.

Level 2
Feb 20, 2020 10:23:45 AM

Even if at the end IRS accepts the software error claims, imagine the efforts & hassles we will be invest in defending the case, is it cheaper to pay a live tax accountant $300 to do the tax instead of paying $30 to TurboTax?

New Member
Feb 22, 2020 10:35:01 PM

Has anyone received an answer from TurboTax as to when this bug will be fixed?

Level 3
Feb 22, 2020 10:55:25 PM

I did and the said they could not replicate the issue.

 

I just went ahead and entered $0 for the second (latest) 1098 and enter $0 again when it said there was an error. When I got the forms downloaded everything looked fine and I’m comfortable it is accurate so I went ahead and submitted. 

Level 2
Feb 23, 2020 10:50:28 AM

No acknowledgement from them that this is even a bug, they seem to be taking the tact that it ignoring your answer to the interest cap question is a "feature".  I ended up giving up and just filling in this section of the worksheet myself.  Once I corrected the answer in the "Tax and Interest Deductions Worksheet" to correctly state that no my interest deduction should not be limited it cleared the smart check error for the Limited Int/Points value which was only getting flagged as required because the answer to the yes/no question was getting incorrectly translated.

Expert Alumni
Feb 24, 2020 6:20:21 PM

There is a workaround for this. 

 

For desktop versions:

  • In Forms view, locate and click on Tax & Int Wks on the left from the forms list
  • On the form, scroll to Mortgage Interest Limited Smart Worksheet
  • Click on NO to the right of the question, Does your mortgage interest need to be limited

For online versions:

  • Under Deductions & Credits, expand the menu for Your Home
  • Click Start/Revisit next to Mortgage Interest and Refinancing (Form 1098)
  • Click through until you get to a screen that says Do any of these situations apply to you? Mark Yes.
  • On the next screen, take out the zero.
  • Click back and choose No.

 

Level 1
May 1, 2020 9:17:46 AM

Your work around fixes the federal tax. My mortgage interest deduction is not limited (my principal is less then $750k). However the California adjustment is still incorrect. My mortgage was acquired in June 2019. I have 2 1098s. California adjustment is limiting my mortgage interest deduction because it thinks I have 2 mortgages...

 

definitely a software flaw as I’ve read a dozen or more posts with the same problem. 

help!

 

Level 1
May 3, 2020 7:52:29 PM

Hi, any updates on this?

We are in the same situation - two 1098 forms for 2019, loan servicer was transferred in April 2019. When federal info is transferred to the California, it appears that I have two loan balances at the beginning of the year, when there was actually only one. Please help!

Returning Member
May 31, 2020 9:58:47 PM

this is really stupid. How could the they don't test this common case...

Expert Alumni
Jun 1, 2020 9:26:59 AM

The limit on the amount of interest has changed under the Tax Cuts & Jobs Act. The interest deduction pre-TCJA has been available to qualified mortgage debt up to $1 million ($500,000 married filing separately).

 

Through 2025, the TCJA has lowered the amount of qualified mortgage debt to $750,000. For qualified mortgage debt incurred on or before December 15, 2017, the $1 million limit remains in place, thus "grandfathering" existing mortgage debt.

 

For desktop versions:

  • In Forms view, locate and click on Tax & Int Wks on the left from the forms list
  • On the form, scroll to Mortgage Interest Limited Smart Worksheet
  • Click on NO to the right of the question, Does your mortgage interest need to be limited

For online versions, after entering the 1098 interest information, continue through the screens and TurboTax will ask you if the interest needs to be limited.