Deductible Home Mortgage Interest Worksheet 2020 - Error Avg Balance

[42Amy1]

@GSD77 I decided to try the simple change interest on 1098 to the actual lower deductible amount of interest (after overriding it which puts a red !!! on it. (error?)

Now it's there and I can't remove the override.  Any ideas?

(It would now feed in as the same number as the override.)

YIKES!

[42Amy1]

Nevermind. @GSD77 

 I overrode the override which allowed the Mortgage Interest worksheet to populate Schedule A with the correct value.  I entered only the deductible amount of Interest on the single 1098, which I determined elsewhere.  Had I left the override I wouldn't have been able to eFile!

Thanks to everyone here helping with this TT Mortgage Interest Deduction problem which still exists but needs workaround.  

PHEW!

[Beweiss140]

Not sure if anyone can help but bought a new home and having mortgage interest issues:

different lenders:

First home 500k= 10k interest 

sold home mid year 

new home 1 million = 20k interest

the system wants to take 1 million/750k and apply 75% to both the new and old loan.

system is only allowing 7500 interest of first loan when I should get 10k.

any help?

[GSD77]

New computer and haven’t reloaded 2020 TT, but think TT doesn’t have good fix.  My previous posts are related to multiple refinancings, which this is not.  Enter two mortgages separately  maybe entering later mortgage first so TT will ask follow up question on ending balance for each loan.   Entering later mortgage first will also give you you TT calculated interest deductible on larger loan at average principal amount (slightly larger deductible amount and you can add the additional 10K to get a total.    Then I believe if you go to Home Mortgage Worksheet in TT Forms you should find the calculated interest 75% of total interest paid you.  Find amount on TT worksheet and override total to calculated amount of (I) 75% of 20K on average principal plus (ii) 10K. Then enter combined amount as a manual override on TT mortgage interest worksheet, which will transfer to Schedule A.

IRS allows you to attach explaining Schedule , but not necessary at this point.  Not trying to cheat on taxes and just maintain the supporting schedule just in case IRS audits or asks.

You can find right schedule to override deductible interest amount by hitting source on active number.  Believe you can right click on Schedule A or TT Mortgage Interest Deduction Worksheet to find active cell to override.

Post additional questions. I’ll try to download 2020 TT to help if above guesstimate doesn’t work for you.  TT hasn’t fixed this issue for 2019 or 2020.  So some manual override.  Won’t be issue in 2021 unless you refinance.  Don’t know if TT will fix in 2021 for your case. And also multiple refinancings

[GSD77]

Ignore most of my earlier post.  I downloaded 2020 TT software and tried to override on Schedule A , which created an error that wouldn’t allow e-filing, and no place to override on Home Int Wkst either in View - Forms.

Did find a fix:

1. Prepare Excel type worksheet to calculate deductible mortgage interest consisting of:

 A.  10K from first 500,000 loan, plus

 B.  Average Principal Outstanding on new loan calculated per IRS Publication for Mortgage Interest Deductible (Simple Calculation would be end of month principal for each month the loan was outstanding and divide total by total number of months loan outstanding , which will give you an average principal outstanding slightly less than 1,000,000 used in your question).  Then calculate deductible interest as ($750000 divided by calculated average principal outstanding) times 20K.

Take the calculated total per above and go to Tax & Int Wks in View Tab - Forms and Right Click on Line A2 in Mortgage Interest Limited Smart Worksheet on said form and click on Add Supporting Details.  In DESCRIPTION COLUMN type in “calculated amount” or similar descriptor and go to AMOUNT COLUMN and enter the above calculated allowable deductible mortgage interest amount.  Hit Enter and the correct interest deduction will automatically transfer to Schedule A without creating an error that prohibits you from filing electronically.

Post if you have any issue.  Good night.

[linma1]

I understand what you are suggesting for the second loan ($1M one), but shouldn't you add the average balance form that with the average balance of the $500k one? Why do you think you can deduct the full interest from the $500k one? Isn't the $750k limit applied to the total of all loans?

[GSD77]

May be above my pay grade.  Went back Publication 936, and using average loan balance using ending balance of each loan the method proposed by me and original poster may limit their interest deduction by too much.  Please check my math and logic.  Poster wanted to deduct 10K plus 75% of 20K or combined 25K.    TT was at calculating 75% of both or 22.5K, I presume.

Reading Publication 936 and using end of month basis to calculate Average Balance (because loan example was twice as much on second loan and interest was also twice as much, I used 6 months outstanding fir each loan ... may be off as rates probably not identical) I calculated Average Balance as:

Loan 1:

500,000 times 6 months = 3,000,000 divided by 12 = 250,000

Loan 2:

1,000,000 times 6 months = 6,000,000 divided by 12 = 500,000

Add loan 1 and loan 2 Average Balances for a total of 750,000... so all is deductible as equal to or below $750,000 limitation.  Your thoughts?  Poster would have to do exact calculation.

[linma1]

Makes sense. Now a different question - I'm using the online version of TT. How do I enter these numbers? I don't think I can access the worksheets? All I can do is to go through the interview. Should I enter these numbers instead of what's on my 1098 box2 when asked about Outstanding mortgage principal, etc. to achieve the same average mortgage calculation? 

[GSD77]

On the online version, which I do not use, can you go to "View Tab"  and instead of selecting "Step by Step"  open Forms.  You can then go to Forms and then go to  TAX & INT WRKST and override (see below)

.

I downloaded 2020 TT software and tried to override on Schedule A , which created an error that wouldn’t allow e-filing, and also no place to override on Home Int Wkst either in View - Forms.

Did find a fix:

1. Prepare Excel type worksheet to calculate deductible mortgage interest consisting of Average Principal Outstanding and then calculate the correct interest deduction   (i.e. Average Principal Outstanding divided by $750,000 and the multiple that percentage by total interest paid.

Then proceed with Override on Forms, if available:

Take the calculated total per above and go to Tax & Int Wks in View Tab - Forms and Right Click on Line A2 in Mortgage Interest Limited Smart Worksheet on said form and click on Add Supporting Details.  In DESCRIPTION COLUMN type in “calculated amount” or similar descriptor and go to AMOUNT COLUMN and enter the above calculated allowable deductible mortgage interest amount.  Hit Enter and the correct interest deduction will automatically transfer to Schedule A without creating an error that prohibits you from filing electronically.

HOWEVER YOU SAY ONLINE DOESN"T LET YOU DO IT SO, I would follow your suggestion and just enter Average Principal Outstanding and TOTAL INTEREST.   I believe TT will calculate correct deductible amount  by taking Average Outstanding / $750,000 times interest paid.

Check amount on Schedule A and see it is equal to your calculation.

Hopefully one method will work.  Save your Excel worksheet /. Calculation just in case IRS questions.  That said Worksheets are not filed with IRS just back-up / calculation tool.

Post if you have any issue.  

[GSD77]

Someone asked a question  on my previous answer, see thread below.  May be able to deduct more than the 10K plus 75% of 20K in below calculation.  Copied all so you can follow.  Your average loan balance depending on months each loan outstanding may give you a greater deduction.

Ignore most of my earlier post.  I downloaded 2020 TT software and tried to override on Schedule A , which created an error that wouldn’t allow e-filing, and no place to override on Home Int Wkst either in View - Forms.

Did find a fix:

1. Prepare Excel type worksheet to calculate deductible mortgage interest consisting of:

 A.  10K from first 500,000 loan, plus

 B.  Average Principal Outstanding on new loan calculated per IRS Publication for Mortgage Interest Deductible (Simple Calculation would be end of month principal for each month the loan was outstanding and divide total by total number of months loan outstanding , which will give you an average principal outstanding slightly less than 1,000,000 used in your question).  Then calculate deductible interest as ($750000 divided by calculated average principal outstanding) times 20K.

Take the calculated total per above and go to Tax & Int Wks in View Tab - Forms and Right Click on Line A2 in Mortgage Interest Limited Smart Worksheet on said form and click on Add Supporting Details.  In DESCRIPTION COLUMN type in “calculated amount” or similar descriptor and go to AMOUNT COLUMN and enter the above calculated allowable deductible mortgage interest amount.  Hit Enter and the correct interest deduction will automatically transfer to Schedule A without creating an error that prohibits you from filing electronically.

Post if you have any issue.  Good night.

0

Reply

linma1

Returning Member

3 hours ago

 

I understand what you are suggesting for the second loan ($1M one), but shouldn't you add the average balance form that with the average balance of the $500k one? Why do you think you can deduct the full interest from the $500k one? Isn't the $750k limit applied to the total of all loans?

0

Reply

GSD77

Level 3

2 hours ago

 

May be above my pay grade.  Went back Publication 936, and using average loan balance using ending balance of each loan the method proposed by me and original poster may limit their interest deduction by too much.  Please check my math and logic.  Poster wanted to deduct 10K plus 75% of 20K or combined 25K.    TT was at calculating 75% of both or 22.5K, I presume.

Reading Publication 936 and using end of month basis to calculate Average Balance (because loan example was twice as much on second loan and interest was also twice as much, I used 6 months outstanding fir each loan ... may be off as rates probably not identical) I calculated Average Balance as:

Loan 1:

500,000 times 6 months = 3,000,000 divided by 12 = 250,000

Loan 2:

1,000,000 times 6 months = 6,000,000 divided by 12 = 500,000

Add loan 1 and loan 2 Average Balances for a total of 750,000... so all is deductible as equal to or below $750,000 limitation.  Your thoughts?  Poster would have to do exact calculation.

0

Reply

linma1

Returning Member

an hour ago

 

Makes sense. Now a different question - I'm using the online version of TT. How do I enter these numbers? I don't think I can access the worksheets? All I can do is to go through the interview. Should I enter these numbers instead of what's on my 1098 box2 when asked about Outstanding mortgage principal, etc. to achieve the same average mortgage calculation? 

0

Reply

GSD77

Level 3

2m ago

 

On the online version, which I do not use, can you go to "View Tab"  and instead of selecting "Step by Step"  open Forms.  You can then go to Forms and then go to  TAX & INT WRKST and override (see below)

.

I downloaded 2020 TT software and tried to override on Schedule A , which created an error that wouldn’t allow e-filing, and also no place to override on Home Int Wkst either in View - Forms.

Did find a fix:

1. Prepare Excel type worksheet to calculate deductible mortgage interest consisting of Average Principal Outstanding and then calculate the correct interest deduction   (i.e. Average Principal Outstanding divided by $750,000 and the multiple that percentage by total interest paid.

Then proceed with Override on Forms, if available:

Take the calculated total per above and go to Tax & Int Wks in View Tab - Forms and Right Click on Line A2 in Mortgage Interest Limited Smart Worksheet on said form and click on Add Supporting Details.  In DESCRIPTION COLUMN type in “calculated amount” or similar descriptor and go to AMOUNT COLUMN and enter the above calculated allowable deductible mortgage interest amount.  Hit Enter and the correct interest deduction will automatically transfer to Schedule A without creating an error that prohibits you from filing electronically.

HOWEVER YOU SAY ONLINE DOESN"T LET YOU DO IT SO, I would follow your suggestion and just enter Average Principal Outstanding and TOTAL INTEREST.   I believe TT will calculate correct deductible amount  by taking Average Outstanding / $750,000 times interest paid.

Check amount on Schedule A and see it is equal to your calculation.

Hopefully one method will work.  Save your Excel worksheet /. Calculation just in case IRS questions.  That said Worksheets are not filed with IRS just back-up / calculation tool.

Post if you have any issue.  

0

Reply

[#11]

Ignore most of my earlier post.  I downloaded 2020 TT software and tried to override on Schedule A , which created an error that wouldn’t allow e-filing, and no place to override on Home Int Wkst either in View - Forms.

Did find a fix:

1. Prepare Excel type worksheet to calculate deductible mortgage interest consisting of:

 A.  10K from first 500,000 loan, plus

 B.  Average Principal Outstanding on new loan calculated per IRS Publication for Mortgage Interest Deductible (Simple Calculation would be end of month principal for each month the loan was outstanding and divide total by total number of months loan outstanding , which will give you an average principal outstanding slightly less than 1,000,000 used in your question).  Then calculate deductible interest as ($750000 divided by calculated average principal outstanding) times 20K.

Take the calculated total per above and go to Tax & Int Wks in View Tab - Forms and Right Click on Line A2 in Mortgage Interest Limited Smart Worksheet on said form and click on Add Supporting Details.  In DESCRIPTION COLUMN type in “calculated amount” or similar descriptor and go to AMOUNT COLUMN and enter the above calculated allowable deductible mortgage interest amount.  Hit Enter and the correct interest deduction will automatically transfer to Schedule A without creating an error that prohibits you from filing electronically.

Post if you have any issue.  Good night.

[linma1]

I understand what you are suggesting for the second loan ($1M one), but shouldn't you add the average balance form that with the average balance of the $500k one? Why do you think you can deduct the full interest from the $500k one? Isn't the $750k limit applied to the total of all loans?

[GSD77]

May be above my pay grade.  Went back Publication 936, and using average loan balance using ending balance of each loan the method proposed by me and original poster may limit their interest deduction by too much.  Please check my math and logic.  Poster wanted to deduct 10K plus 75% of 20K or combined 25K.    TT was at calculating 75% of both or 22.5K, I presume.

Reading Publication 936 and using end of month basis to calculate Average Balance (because loan example was twice as much on second loan and interest was also twice as much, I used 6 months outstanding fir each loan ... may be off as rates probably not identical) I calculated Average Balance as:

Loan 1:

500,000 times 6 months = 3,000,000 divided by 12 = 250,000

Loan 2:

1,000,000 times 6 months = 6,000,000 divided by 12 = 500,000

Add loan 1 and loan 2 Average Balances for a total of 750,000... so all is deductible as equal to or below $750,000 limitation.  Your thoughts?  Poster would have to do exact calculation.

[linma1]

Makes sense. Now a different question - I'm using the online version of TT. How do I enter these numbers? I don't think I can access the worksheets? All I can do is to go through the interview. Should I enter these numbers instead of what's on my 1098 box2 when asked about Outstanding mortgage principal, etc. to achieve the same average mortgage calculation? 

[GSD77]

On the online version, which I do not use, can you go to "View Tab"  and instead of selecting "Step by Step"  open Forms.  You can then go to Forms and then go to  TAX & INT WRKST and override (see below)

.

I downloaded 2020 TT software and tried to override on Schedule A , which created an error that wouldn’t allow e-filing, and also no place to override on Home Int Wkst either in View - Forms.

Did find a fix:

1. Prepare Excel type worksheet to calculate deductible mortgage interest consisting of Average Principal Outstanding and then calculate the correct interest deduction   (i.e. Average Principal Outstanding divided by $750,000 and the multiple that percentage by total interest paid.

Then proceed with Override on Forms, if available:

Take the calculated total per above and go to Tax & Int Wks in View Tab - Forms and Right Click on Line A2 in Mortgage Interest Limited Smart Worksheet on said form and click on Add Supporting Details.  In DESCRIPTION COLUMN type in “calculated amount” or similar descriptor and go to AMOUNT COLUMN and enter the above calculated allowable deductible mortgage interest amount.  Hit Enter and the correct interest deduction will automatically transfer to Schedule A without creating an error that prohibits you from filing electronically.

HOWEVER YOU SAY ONLINE DOESN"T LET YOU DO IT SO, I would follow your suggestion and just enter Average Principal Outstanding and TOTAL INTEREST.   I believe TT will calculate correct deductible amount  by taking Average Outstanding / $750,000 times interest paid.

Check amount on Schedule A and see it is equal to your calculation.

Hopefully one method will work.  Save your Excel worksheet /. Calculation just in case IRS questions.  That said Worksheets are not filed with IRS just back-up / calculation tool.

Post if you have any issue.  

[bigscout79]

This is ridiculous and exactly the reason I do my taxes twice in different software.  For years TT has been my goto and worth paying the extra for because I trust it.  Not only do two of the free ones do it correctly this year when TT doesn't, but I spent hours trying to figure out why.  I have to intentionally mis-enter it in TT to make it work, and then pay a few hundred for the pleasure?  No thank you.

[GSD77]

Inexcusable; been two year problem affecting multiple refinancings and $750,000 limitation.  Hopefully they address.  Third year will lose a lot.

Wonder how many do not recognize the error and file at higher tax amount.

[42Amy1]

@GSD77 

It's outrageous and although I've put my trust into TT for over two decades, it's now gone. Anyone here know of any alternatives to TT?  I look forward to all replies as I will strongly consider a reputable alternative for next year.  Never have I wasted SO many hours to figure out one deduction which should have been an easy fix for a competent programmer. 

[Mikemcna]

I feel the same way.  Been using TT for over 21 years, probably since about the time it came out on diskettes, then CD-ROM, now download.  This took me a little time to research on IRS.gov, and reading this thread, then to set up the calculations and get the correct answer, then to force feed it to TT.  I will have to do that again for 2021 unless TT fixes it.  If they don’t, 2021 likely will be my last year using the product.  Not because this is such a big issue, but because it makes me wonder what else they have wrong, or not optimal.

[Btcone01]

who can i talk to