☰
✕
Sign In

Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
Level 2
posted Dec 4, 2021 12:29:55 PM

Why is turbotax not making the appropriate adjustments to mortgage interests exceeding 750K. It is wrongly calculating all mortgage interest as deductible and shouldn't

I have two loans, not complicated, one before 2017 with mortgage interest of 5400 and owe 52K and my primary home bought in 2020 with mortgage interest of 20K and owe 935K. For some reason turbotax is allowing ALL of the interest to be deductible and should be prorated. I had to abandon turbo last year for a similar home mortgage issue they could not address. this one is straight forward

0 6 1286
1 Best answer
Level 15
Dec 10, 2021 5:25:16 AM

I would use such a workaround, rather than abandon my tax software program.

Note that you will be deducting less interest than shown, not more.

 

Since the rule is non-trivial, Turbotax should be able to do this for you.

No idea why there are so many on the forum with the same complaint. It's not rocket science.

 

6 Replies
Level 15
Dec 4, 2021 3:25:09 PM

Prorated? or limited  (capped)?

If you know the correct calculation, enter the deductible amount of interest as your interest paid.

Level 2
Dec 9, 2021 7:38:35 PM

understood ' however then it does not match the 1098. 

 

thanks

Level 15
Dec 10, 2021 5:25:16 AM

I would use such a workaround, rather than abandon my tax software program.

Note that you will be deducting less interest than shown, not more.

 

Since the rule is non-trivial, Turbotax should be able to do this for you.

No idea why there are so many on the forum with the same complaint. It's not rocket science.

 

Level 2
Dec 10, 2021 7:37:06 PM

I did find buried in the help section an area where Turbo tax recommends using the IRS publicationmanually calculating the deductible, and as you propose overwriting the 1098 dollar

Level 15
Dec 11, 2021 7:00:47 AM

alternatively, as another approach,

you can enter the entire amount from 1098 and then mark the disallowed portion.

as interest on borrowing not used to finance your home

you still have to do the calculation yourself that TurboTax is supposed to do for you.

Level 15
Dec 11, 2021 8:12:18 PM

@panchoydalila 

 

Update:

TurboTax 2018 won't calculate the reduced amount of interest when your interest deduction is limited.
After entering all your 1098s. TurboTax will then refer you to IRS Pub 936 to calculate this amount and lets you enter that.

TurboTax 2021 is probably unchanged in this regard.

The other tax software I mentioned (privately) is the same but makes the worksheet available in Forms mode so you don't have to wade through the IRS Pubs.