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abh39907
New Member

Turbotax software was not aware of the mortgage interest deduction only applying to the first $750,000 of mortgage debt. I am being audited resultantly. what should I do?

I had two mortgages, one with a balance >1M so I assume it would have corrected for this.  It seems the same error occurred in 2019 and 2020.
2 Replies
Mike9241
Level 15

Turbotax software was not aware of the mortgage interest deduction only applying to the first $750,000 of mortgage debt. I am being audited resultantly. what should I do?

the $1 million debt limitation continues to any debt incurred on or before 12/15/2017.  it becomes complicated if you have acquisition debt part originating before that date and part after and even more complicated if there was cash-out refinancing

 

after the last update 9/23/2021, TT is computing the correct amount but using the wrong amount in the tax return 

Opus 17
Level 15

Turbotax software was not aware of the mortgage interest deduction only applying to the first $750,000 of mortgage debt. I am being audited resultantly. what should I do?

First of all, your question is not clear. What year is being audited? The 2020 tax year has barely finished being processed, and I would be surprised if audits have started. Are you being audited for 2019 or 2018? Second, as noted, the limitation becomes more complicated if this loan was in place before the tax law changed in 2017, or if you had a pre-2017 loan that you added to or refinanced after 2017.  It also depends on whether in the mortgage you have is entirely acquisition debt or if it also contains equity debt.

 

Third, I don’t know what the other response is talking about with the current (2020) program using incorrect figures.  I am aware that TurboTax has a problem if you refinance the mortgage in the middle of the year, where each mortgage is less than $750,000 but the total is more than $750,000. I am not aware of any problem where TurboTax calculates the limitation incorrectly if you have a single mortgage over $750,000 or $1 million that was not refinanced.  I also am unaware of problems that occurred in previous years, and it sounds like you are being audited for a previous year.

 

Now, as far as what you can actually do at this point.  The TurboTax accuracy guarantee guarantees accurate calculations.  You always oh you’re correct tax to the IRS, but if the calculation is incorrect, TurboTax will pay any penalties and interest that you owe. In order to use the accuracy guarantee, you must file a claim within 60 days of receiving a notice from the IRS.

https://ttlc.intuit.com/community/charges-and-fees/help/what-is-the-turbotax-100-accurate-calculatio...

 

You also haven’t defined whether this is a full in person audit, or a correspondence audit, where the IRS has sent you a letter and is asking you to send proof back within a certain date.  If you would like to provide more details about exactly what is being asked, which tax year, and the details of your mortgage, the volunteers on this forum may be able to help you figure out the correct calculation to demonstrate whether or not your tax return was incorrect, whether you owe a different amount than the IRS proposes, and helping you assemble the correct documentation for the IRS.  

 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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