Deductible Home Mortgage Interest Worksheet 2020 - Error Avg Balance

[MommyG5]

I’m hoping to try and amend my 2020 return this evening. Will try what you shared in the software!

[GSD77]

There are some good responses, hopefully mine included, to fool system to get correct result.

[GSD77]

There are some good fixes to get around this issue, hopefully mine included, to fool TurboTax and get correct deduction.

GSD77

[GSD77]

Is your new mortgage for number of days outstanding 362/365 times amount plus 3/365 times amount less than 750000.  I would use the calculated amount  for beginning and use actual of new mortgage as beginning and ending.   Name for each mortgage holder that is, bank 1 and bank 2 and combine interest amounts as one loan and hopefully will work.  Also if combined over 750000 I think it will also work, but interest deduction will be limited.  You should be able to calculate on excel or piece of paper to see if amount is right.  If less than 750000: obviously 100% of interest deductible.

[DianeW777]

First you want to start your amended return correctly.   Use the link below and select 2020 to amend last year's return, then carefully follow the instructions before you begin.

• How to amend a return that has already been filed.

Next, follow the steps below assuming the criteria matches your situation.  This should allow you to proceed to complete your amended return if the following statement is true. Add all of the Forms 1098 together to make one entry with the ending mortgage balance of the loan that was the final one in 2020.

• 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). 

NOTE: If the amount of your mortgage is more than the cost of the home plus the cost of any substantial improvements, only the debt that isn't more than the cost of the home plus substantial improvements qualifies as home acquisition debt. This means that if  'cash out' proceeds were not used to improve the home they would not be part of home acquisition debt.

Any additional debt not used to buy, build, or substantially improve a qualified home isn't home acquisition debt. TurboTax will calculate the amount of allowed mortgage interest deduction based on your entry or you can choose to make the entries yourself.

• To review the information and worksheets you can use this link: IRS Publication 936 2020, page 12

Use the following link (and hyperlinks) for more information: Home Mortgage Interest Deduction; Deducting Home Mortgage Interest FAQs

@MommyG5

[42Amy1]

I spent dozens of hours on the home mortgage interest deduction last year (2020) and finally just used Pub 936 myself and manually entered the correct, lower than my 1098s, deductible interest value on Schedule A.  Since this was such a huge issue before, I was thrilled to see the new 'Deductible Mortgage Interest worksheet" for 2021.

Sadly I am completely unable to ENTER anything on this worksheet and now as I read all the comments of others, it apparently doesn't work for any but the simplest situation,

I'm stuck on how on earth does one enter the values?? I cannot do it on easy step or on Forms.

[42Amy1]

How does one even enter anything on this worksheet? I am unable to use it other than open it on Forms.

[42Amy1]

That was the same problem as last year.  Not happy to hear it has not been fixed.

[42Amy1]

go to Forms and search Deductible Home Mortgage Interest worksheet.  

[DawnC]

You should have a Home Mortgage Worksheet (Lender name) for each mortgage.    Halfway down those worksheets is a section titled Home Mortgage Interest Limitation Worksheet.   Some of the entries comes from what you enter in the interview and TurboTax calculates the other entries.   But you have to ability to change all of those entries, either by changing your answers to those questions in the interview or entering the information directly on the forms in Forms Mode where allowed, see link below.   

There are questions regarding the purchase date of the home (the same date in the case of a refinance) and the outstanding balance/final payment date for each loan at the end of the Mortgage Interest section.   Once you go through these questions, after entering all of your forms, you should have the Deductible Home Mortgage Interest Worksheet which pulls info from the Home Interest Worksheets.   

What do I do if I have multiple 1098s from refinancing my home debt?    Help options for correcting home mortgage interest    @42Amy1

What do all the different colors in Forms Mode mean?

[42Amy1]

Thank you.  I accessed the Forms mode and was able to enter everything correctly, per Pub. 936.  Turbotax then came up with the correct deductible interest amount, however it reported that # on Schedule A, line 8a, which should have been the higher 1098-reported interest (incorrect).  

Is this OKAY to leave as is?

Since it is lower than the interest paid, it screws up my state return, which relies on Schedule A for their Mortgage Interest deduction (which is different than Fed-where deductible interest up to $1M is allowed)

Is there a mechanism to explain this line 8a on Schedule A?  I can't find one.

[DianeW777]

It is reported correctly on line 8a, of Schedule A, it is all right to leave it as is. No explanation is necessary.

You should be able to adjust your mortgage interest on your state return if your state allows a higher deduction than federal.

[gdillon22]

why is my mortgage interest not tax dedutable

[GSD77]

It is,  Turbo has had some issues with mortgage interest deduction, especially if you refinanced during year  and especially if mortgage amount  ( or combined mortgage amounts original and refinanced loans exceed 750,000.  Deductible as long as Primary Home or Second Home and  loan is secured by property.

Post again with more information for help.  My last year posts showed some work around to get appropriate deduction.  Also check TT entries again to make sure you didn’t click wrong button or forgot to click that interest is on a loan secured by home / property.

[DawnC]

The IRS lets you deduct your mortgage interest, but only if you itemize deductions. You can't deduct the principal (the borrowed money you're paying back).   In addition to itemizing, these conditions must be met for mortgage interest to be deductible:

• The loan is secured, which means the lender has some kind of guarantee of payment, usually in the form of property. If a borrower defaults on payments, the lender can seize the property that’s securing the loan. If you’re buying or refinancing a home, especially if it’s your first home, the loan is usually secured by the home you’re buying or refinancing.
• The home with the secured loan must have sleeping, cooking, and toilet facilities.
• The debt can’t exceed $750,000 (or $1,000,000 if the loan was taken before December 16, 2017) to get the full deduction.
• You or someone on your tax return must have signed or co-signed the loan.
• If you rented out the home, you must have used the home more than 14 days during the tax year or 10% of the number of days you rented it out, whichever is greater.

If you have multiple 1098 mortgage forms, you’ll enter them one at a time.  After going through the steps with the first one, you can add a lender when you get to the Mortgage deduction summary screen. (In the case of a refinance, the steps may be different depending on your total amount of home debt. Refer to this article for more information.)  @gdillon22