Itemized Deduction miscalculation (software bug): Multiple 1098s (for a single loan) with paid points (box 6)

[Arktus]

To put it briefly, when multiple 1098s for the same loan (when sold by the bank not a refinance) has to be entered, if the most recent 1098 has a number greater than 750,000 in box 2 (mortgage principal), the software will only include the mortgage point (box 6) from the most recent 1098 into the deduction (1040:Schedule A:#8a) and ignores any from previous 1098s resulting in lower deduction. (Or at least I can't figure out a way to get it to work correctly)

Example 1: (Incorrect calculation, only 13,000 deduction)

The expected deduction (to be written in 1040:Schedule A:#8a) in this case should be 6,000+7,000+10,000 = 23,000. However, the software only reports 6,000+7,000 = 13,000.
If either the points (box 6) were reported on the most recent 1098 (example 2) or principal (box 2) of the most recent 1098 was less than 750K (example 3) the software adds the correct 23,000 to the deduction.

Example 2: (Correct calculation of 23,000 deduction)

Example 3: (Correct calculation of 23,000 deduction)

Although, this number should be adjusted (scaled down) for example 1 and 2 because the principal is greater than 750K. However, since the different is only 1$ , the adjustment is insignificant.

Based on what I understood from experimenting with different inputs, when the principal (box 2) of the most recent 1098 is less than 750K (example 3), since no adjustment is necessary, it directly adds them up to fill the field (1040:Schedule A:#8a). However, when that is not the case, it fills out the "Schedule A-Deductible Home Mortgage Interest Worksheet" worksheet, and doesn't reflect the purchased points from older 1098s (Schedule A-Deductible Home Mortgage Interest Worksheet:Part 3-Deductible Home Mortgage Interest:#20)  resulting in incorrect (lower) deduction.

Sadly, this miscalculation results in significant over pay on the taxes, without even getting to know about it.
So far, I was on a call with 2 different support agent. However, both calls were dropped half way through without a follow up and didn't reach a conclusion.

P.S: I have followed TT's guide on how to enter multiple 1098s for the same loan from here: How do I handle multiple 1098 mortgage forms? 
Although, when the principal values (box 2) are greater than 750K, an additional step is introduced (asking for the remaining balance of the loans at the end of the year). However, that doesn't affect the result from above.

[PatriciaV]

Yes, the mortgage interest limitations calculations are complex and not all situations are supported in TurboTax.

You have discovered the best option to report points is to enter them on Form 1098 for the most recent loan. Also, entering the ending balance as of the first of the following year (1/1/2023 for a 2022 1098) results in the correct calculation of average balance for most loans.

[Arktus]

Thank you Patricia for your quick response and acknowledging the issue 🙂

I don't believe this is a complex fix, but I can imagine that your team is busy with many other tasks and can't prioritize random fixes.

However, is it possible to add some information in the software for this issue and workaround, or at least adjust the posted guide on your website (How do I handle multiple 1098 mortgage forms?) with this situation? As I mentioned, considering the values triggering the issue, it results in a significant over pay in taxes.

Thanks for your consideration.

[amousavian]

Hi Patricia,

I have the exact same problem and I learned about this after my tax return is accepted by IRS. Can you tell me how I can amend my tax? The difference is actually quite significant and it's not ideal that intuit has this flaw even though the premium package is supposed to maximize the returns!!!!!!