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TryingToUseTT
Level 2

Home Interest Deduction: Multiple 1098s, Box 2 Outstanding Balance still aggregating every loan in that year.

I see that a new update came out today to address this, but the all they did was update the instructions, not fix one of the problems.  I have 5 1098s.  My loan coming into the year, my HELOC, my first refi, my first refi which was transferred to another lender, my 2nd ref.  The only way the numbers work correctly for me is to aggregate all loans except the HELOC.  My main problem is that the box 2 numbers aggregate and that screws up both my Federal return numbers my California numbers making my total debt on my house over twice as much as it really is.

 

Since this problem has been reported for years do we really think it will be addressed by TT this year?

 

Please help if you have any solutions.  As I said the only one where the numbers are correct is just aggregating them all into one loan (except the HELOC).

3 Replies
ReneeM7122
Level 8

Home Interest Deduction: Multiple 1098s, Box 2 Outstanding Balance still aggregating every loan in that year.

TurboTax has provided the following information about entering multiple 1098 forms:

 

How do I handle multiple 1098 mortgage forms?

 

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, it's best to enter the 1098 from your original loan before the 1098 from your refinance.)

But, if they're both from the same lender, and one of them has the “Corrected” checkbox marked at the top, enter the corrected 1098 and discard or shred the other one.

 

 

What do I do if I have multiple 1098s from refinancing my home debt?

 

If your total home debt is under $375,000 ($250,000 for married filing separate) there is nothing new for you to do in 2020. Enter each 1098 as you normally would.

Home Debt Over $375,000

Under tax law, you are limited on the amount of home interest you can deduct. The limit is based on the loan amount and date of the origination of debt. We want to make sure we calculate this correctly for you. 

If you refinanced last year, you’ll have a Form 1098 from your previous lender and one from the lender you refinanced with. You’ll need both forms. 

Follow these steps to enter your mortgage information:

  1. Gather all of your 1098 forms related to your refinance (the form from your original lender and the form from your new lender)
  2. Grab a calculator and add together the box 1 amount from each form. Enter the total in TurboTax as Box 1 Mortgage interest.
  3. Add the Box 5 amount from each form and enter the total as Box 5 Mortgage insurance premiums. (If you weren’t required to pay mortgage interest, these boxes will be blank on your forms and you won’t enter anything.)
  4. Add the property tax paid from each form and enter it in the Property (real estate) taxes box.

Next, finish adding info for boxes 2, 3, 7, and 11 using Form 1098 for the original loan.

 

What if I have more than two 1098s?

You should combine all of the 1098s directly related to the refinance and enter it as one 1098.  An example of this is if you refinanced two loans into one loan. Any 1098s not directly related to the refinance should get entered separately.

 

What if I paid points?

Points on Loans Paid Off in 2020: Enter the points on your 1098 you have started and mark you paid off the loan when promoted.

Points on Loans on New Loans: You will want to enter a separate 1098 to cover these points paid. When prompted, enter 0.00 for Boxes 1, 2, 5, and the Property (real estate) taxes box, and checkbox 7, as you’ve already entered the details on your first 1098. For Box 3, add the date in 2020 when the loan originated.

WThielen22
New Member

Home Interest Deduction: Multiple 1098s, Box 2 Outstanding Balance still aggregating every loan in that year.

We refinanced two homes in 2020.    Appears TurboTax can not handle the refinancing and we are to combine the 1098's related to each of the properties.   What amount do we put in box 2 and date in box 3.   The new mtg or the old one that is now paid off?

JamesG1
Employee Tax Expert

Home Interest Deduction: Multiple 1098s, Box 2 Outstanding Balance still aggregating every loan in that year.

TurboTax asks you to enter each IRS Form 1098 separately.

 

In TurboTax Online Deluxe, I was able to enter a home loan on an IRS form 1098 and the second IRS form 1098 for the refinanced loan.  For the refinanced loan, I used the balance of the loan at the time of loan pay-off. 

 

I was given the full mortgage interest deduction and the Home Mortgage Interest Limitation Worksheet did not add the two mortgage balances together.

 

The entries were made at Federal / Deductions & Credits / Mortgage Interest (Form 1098).

 

Entries for the original loan 

  • Do any of these uncommon situations, I entered None of these apply.
  • Did you pay points, I entered I’ve already deducted.
  • Was this loan paid off or refinanced, I entered Yes.
  • Is this loan a home equity, I entered No, this is the original loan.

 Entries for the second loan 

  • Do any of these uncommon situations, I entered None of these apply.
  • Did you pay points, I entered I didn’t pay points.
  • Was this loan paid off or refinanced, I entered No.
  • Is this loan a home equity, I entered Yes, this is a loan I’ve refinanced.
  • So what type of loan is it? I entered A mortgage loan that I’ve refinanced.
  • Have you ever pulled cash? I entered No.

 

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