I entered the 2 1098s into Tax Act and amount due decreased after each one like I expected. In Turbo Tax, enter first and it decreases.. enter the 2nd and it jumps back up to where it was before the first one. It has never done with before and I have take no money out during the refinance and I am under the $750,000 limit.
Some customers are experiencing a limit on the mortgage interest deduction when entering multiple Forms 1098 due to refinancing. You should follow the instructions here to enter 1 form 1098 combining box information from your Forms 1098.
That is not correct though. We should be able to enter each form in without having to combine. I have 1098 forms from Wells Fargo and Quicken Loans. Both were from refinancing. How does it make sense to combine the two forms? Turbo Tax needs to come up with a software fix instead of offering a hack solution.
This may be an alternative.
If you've refinanced or had your mortgage lender changed, the outstanding mortgage principal listed in the combined total of them on Line 2 of the 1098 will be too large.
When you 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. Enter both 1098's.
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".
@serg87