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If you choose to move forward with your return and if you have a mortgage debt that is below $750,000, (or $1M for grandfathered debt incurred on or before December 15, 2017) this means all of the mortgage interest would be allowed to be used on your itemized deductions as long as there was no cash taken out that was not used on the home (all borrowed funds were used to buy, build or improve the home). If this is your situation then enter the mortgage debt for Form 1098 with the current lender, and then enter $1 or $0 for the second or former lender in that Form 1098. This will provide the correct amount of allowed mortgage interest deduction.
You may want to delete them first to begin again and also clearing your cache and cookies is a good ides (regularly).
Here's how to enter your mortgage interest statement in TurboTax:
Although I got a notification from the other thread that the issue has supposedly been resolved, I cannot confirm that it actually is. My deduction is still capped and the description "How did you calculate my $xxx of mortgage interest?" still shows the same useless explanation message "your $xxx of mortgage interest is the same as HP3L12 because true."
I am not willing to pay for the Live support if this is a bug in your program! Should this be a legitimate deduction limitation, please provide a proper description in the explanation message.
Please try the steps below:
Don't see line 8a on 1098
If there is a refi and there was an outstanding mortgage principal listed in both of them on Line 2 on the 1098. When you do put an outstanding balance in both forms, then the program adds them together and if that number is greater than $750k, then it puts you in the category to "limit interest". To get that to go away, you need to go back to the deductions section and click on "edit" mortgage interest statement. Change the line 2 of the mortgage that you no longer owe on (like the one that you refinanced and paid off) to a 0 (zero) because you have refinanced out of that loan and no longer have an "outstanding mortgage principal". Once you change one of them to zero (the one that was paid off by the refinance) then it should no longer pop up with that error at the end when you go to file.
Now that's what should be in the "How did you calculate..." message instead of some cryptic number. This workaround works.
Instead of changing any numbers in your 1098's (your lenders send a copy to the IRS which will then have conflicting information), I think this solution is a lot better (and pretty easy to do):
It involves revising the mortgage interest worksheet, which is not part of your actual tax return. You will then have the proper mortgage interest deduction, as well as matching numbers in your 1098 forms.
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