Mortgage interest is limited?

[user17701539135]

My spouse and I are filing MFS this year.

On the 1098 Mortgage Interest, our Mortgage interest in Box 1 is $10,246 which we are splitting 50/50 on each of our taxes (as $5,123 each) because we're filing MFS and we pay our mortgage from a joint account. Turbotax is saying my interest is being limited. 

Box 1: $10,246 mortgage interest
Box 2: $380,000 outstanding mortgage principle 

Whats going on here? Is this a red flag for an audit? I did everything as instructed, don't own a second home, or sold a home. Dont even know what 'limited' means.

Thank you

[KrisD15]

It looks as if you made an adjustment, is that right? 

From your post, it looks like the program calculated 5,183 which is what you said you each are claiming, is that correct? 

If that is correct, please do not enter anything in the "adjustment"  box. 

[user17701539135]

Hello.

It didnt really calculate the number, it got the number from me; so yes, it spit out the number based on my input.

Box 1 of 1098 Mortgage is actually 10,246. we're filing MFS, so I was told by Turbotax helpers to split it in half 50/50, which is what I did.

I think what happened was the MFS limit is 375,000 for outstanding mortgage principle, and we are just over it.

Not sure why though it would be saying we paid more interest than they can deduct. I dont see the connection.

[KrisD15]

Yes, 375,000 EACH, so if box 2 on the real 1098 reports 380,000, you would change that to 190,000 (half) but if the balance was 760,000, then yes, 380,000 would be slightly over. 

[user17701539135]

behhhhhh.. But the thing is, I spent literal hours researching this and was told by members in TurboTax and other tax forums not to split Box 2 in half because it is only informational and if I were to split it, I would also have to split the Principle balance of my loan which would make everything a mess. Turbotax asks for the principle balance as of 1/1/26 while filing out the 1098.

380,000 is the real balance.