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Where do I enter the second 1098 form? My original mortgage was bought mid-year by a different servicing company. So I have 2 1098 forms.

 
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Level 15
Level 15

Where do I enter the second 1098 form? My original mortgage was bought mid-year by a different servicing company. So I have 2 1098 forms.

Follow the instructions in the TurboTax FAQ below for entering your second 1098 Mortgage Interest Statement

 

https://ttlc.intuit.com/community/entering-importing/help/how-do-i-handle-multiple-1098-mortgage-for...

 

 

*Please click the thumbs-up icon if this response was helpful.
**Please click "Mark As Best Answer" if your question has been resolved. Thank you.

 

 

 

*** I am NOT a tax expert. I am a seasoned TurboTax user, and volunteer to provide assistance to TT users. Nothing I post is to be considered TAX ADVICE; I bear no legal liability for responses.***

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7 Replies
Level 15
Level 15

Where do I enter the second 1098 form? My original mortgage was bought mid-year by a different servicing company. So I have 2 1098 forms.

Follow the instructions in the TurboTax FAQ below for entering your second 1098 Mortgage Interest Statement

 

https://ttlc.intuit.com/community/entering-importing/help/how-do-i-handle-multiple-1098-mortgage-for...

 

 

*Please click the thumbs-up icon if this response was helpful.
**Please click "Mark As Best Answer" if your question has been resolved. Thank you.

 

 

 

*** I am NOT a tax expert. I am a seasoned TurboTax user, and volunteer to provide assistance to TT users. Nothing I post is to be considered TAX ADVICE; I bear no legal liability for responses.***

View solution in original post

Level 2

Where do I enter the second 1098 form? My original mortgage was bought mid-year by a different servicing company. So I have 2 1098 forms.

The response DOES NOT address the question, which is the same issue I am experiencing.  The question arises from the fact that TurboTax treats TWO (2) 1098's FOR ONE (1) LOAN as if they represent TWO loans, and ADDS THE YEAR-END LOAN VALUES as if the 1098's refer to TWO DIFFERENT LOANS.  Again, the question references ONE (1) LOAN with TWO (2) SERVICING COMPANIES REPORTING for THE SAME YEAR (PARTIAL TIME PERIODS).

Level 15
Level 15

Where do I enter the second 1098 form? My original mortgage was bought mid-year by a different servicing company. So I have 2 1098 forms.

@californiacyclist Typically when a mortgage is sold to another financial institution during a calendar year, the two different 1098s generated DO represent ONE loan, and the partial-year interest, principal, etc. is all that is included on each 1098.  As for the year-end loan value, only the value on the 1098 issued by the final financial institution would be the remaining loan value.  

 

If the TurboTax program is adding the values together, this is indeed a BUG and I need to report it to TurboTax Moderators.  Again, EACH 1098 should represent the part-year that the financial institution held your mortgage. The final loan value fields should NOT be totaled when entered into the TurboTax program.

 

Thanks in advance.

*** I am NOT a tax expert. I am a seasoned TurboTax user, and volunteer to provide assistance to TT users. Nothing I post is to be considered TAX ADVICE; I bear no legal liability for responses.***
Level 2

Where do I enter the second 1098 form? My original mortgage was bought mid-year by a different servicing company. So I have 2 1098 forms.

Hi Kat,

 

Thanks for your message.

 

By the IRS website, lenders use Form 1098 is to be used, "...to report mortgage interest (including points, defined later) of $600 or more you received during the year in the course of your trade or business from an individual, including a sole proprietor."  Box 2 on form 1098 reports the principal loan balance as of January 1 of the reporting year.  That is, the loan balance at the beginning of the year, not the year-end balance.  Institutions transferring loans to contra financial institutions have the reporting requirement; the receiving  institution does not have the responsibility of reporting this information because they were not the servicing institution at the time the loan balance was established.  They will have this responsibility for the following reporting year if they remain as the servicing agent.

 

The problem with TurboTax is that it does not permit the user to proceed with the preparation of the tax return if Box 2 is left blank (empty) as shown on Form 1098 (as in my situation) because the software requires a value in the Box 2 field of the step-by-step data entry.  TurboTax then aggregates the Box 2 information to determine the loan balance which results in erroneous mortgage indebtedness.  Put another way, it appears TurboTax automatically assumes two 1098's must represent two loans (e.g., 1st DOT, 2nd DOT, etc.).  ONE LOAN that is sold between financial institutions IS NOT TWO LOANS, but generates TWO 1098's.  The issue becomes more critical when the user prepares their State return, especially in California where loan balances commonly exceed $500,000.  TurboTax thinks there is a single loan in excess of $1MM which triggers certain tax situations that reduce the taxpayor's interest deduction, thus resulting in an erroeously increased tax liability.

 

I was able to work around this issue by leaving the field blank and switching to the Forms View before selecting "continue".  After reviewing the reporting form to ensure it accurately reflected the 1098 issued by the servicing company, and then switched to another form in Forms View to save my information before switching back to the step-by-step feature.

 

Allowing TurboTax to accept a blank field in Box 2 of the step-by-step form would solve this issue.  A follow-up screen could appear after the form was complete to confirm with the user that in fact the Box 2 field is blank on Form 1098 before continuing with the data entry.

 

Hope this is helpful... thank for your interest!

 

Joseph

@Kat 

Level 15
Level 15

Where do I enter the second 1098 form? My original mortgage was bought mid-year by a different servicing company. So I have 2 1098 forms.

Hey, @californiacyclist !  Thanks for your in-depth response.  I have reported the issue for investigation.  TurboTax sure wants to get it right!  Your help is MUCH appreciated!

*** I am NOT a tax expert. I am a seasoned TurboTax user, and volunteer to provide assistance to TT users. Nothing I post is to be considered TAX ADVICE; I bear no legal liability for responses.***
Returning Member

Where do I enter the second 1098 form? My original mortgage was bought mid-year by a different servicing company. So I have 2 1098 forms.

This is still broken as far as I can tell. 
My case is i have two 1098's on a single loan. Both have interest paid amts and both have outstanding principals. so it looks like I have approx double the actual the principal outstanding. 

Furthermore, which of the 1098 forms should carry the work sheet on "Home Mortgage Interest Limitiation Smart Worksheet"? and the calculations about expenditures that went into the home/property? the loan happened in 2017, the sale of the loan happened in 2019... 

Level 15
Level 15

Where do I enter the second 1098 form? My original mortgage was bought mid-year by a different servicing company. So I have 2 1098 forms.

This issue is under investigation by TurboTax.  I'm sharing another running thread below, where users are having the same issue.  As soon as any progress is made, you will be notified in this thread and/or the one linked below.  Thank you for your (amazing) patience!

 

https://ttlc.intuit.com/community/taxes/discussion/re-2019-limit-deductible-mortgage-interest-questi...

*** I am NOT a tax expert. I am a seasoned TurboTax user, and volunteer to provide assistance to TT users. Nothing I post is to be considered TAX ADVICE; I bear no legal liability for responses.***
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