Form 8829 line 10 standard deduction problem

[taliesinii]

Hello all,

My wife has an at-home business for which we take the home office deduction.  I noticed a problem with Form 8829 that I cannot resolve.  TurboTax Home Business (desktop version) is putting the mortgage interest and mortgage insurance on line 10 even though we are taking the standard deduction.  I happened to read the IRS instructions for Form 8829, and it explicitly states that if you are taking the standard deduction, DO NOT put mortgage interest and insurance on line 10, nor real estate taxes on line 11.  But that is what TurboTax is doing!  Help!

[Richard Forster]

I wonder whether this has something to do with the presence of Schedule A in the return even though program selected the standard deduction as the best alternative

[Richard Forster]

Further answering -- Check to see if you checked the "YES" box when you first entered mortgage interest.  If you are not itemizing, but rather taking the standard deduction, the box should be unchecked.  This will force the entry of all your mortgage interest in response to the later excess mortgage interest question that puts an entry into Line 16 of the 8829.

[taliesinii]

Richard,

You are correct.  I called TT directly after I posted this and got it straightened out.  This is the first moment I've had to get back here and post an update.  When taking the standard deduction, you should NOT check the box to include the 1098 from your mortgage company.  Later on TT will ask about excess mortgage interest and excess real estate taxes and that's where you enter the info from the 1098.  I've never had this situation before, and never have excess interest or real estate taxes, so I breezed through those questions and missed the bullet point about still entering them if you take the standard deduction.  I still have to figure out where to enter the mortgage insurance, because it's still ending up incorrectly on line 10 at the moment.

What brought this about in the first place is the fact that TT asks for all of the business stuff before asking about personal stuff and before determining whether to itemize or take the standard deduction.  What is troubling about the whole thing is that TT did not throw a flag at the end of the return when it ran the smart check or whatever it's called.  I only discovered it by accident when I went back to check something else and decided to read the IRS instructions on form 8829.  TT really should have caught that.  Anyway, mostly fixed now.  I will say, the person I got on the phone when I called TT was immensely helpful. 

[Richard Forster · Accepted solution]

Instructions for Form 8829 from IRS say that mortgage insurance premiums for those not itemizing deductions will also go to Line 16 excess mortgage interest.  In TT, do not use the mortgage premium screed to enter this number, but instead, add it to the interest you are reporting as excess mortgage interest.

I agree with you that this matter is not well explained.  This problem should flag once the final decision is made whether to itemize or take the standard deduction.

Hope this helps

[taliesinii]

Richard,

Thanks for the suggestion.  I was hoping I could do that, but hadn't gotten back re-reading the instructions since I got the initial problem resolved late Sat night.

Out of curiosity, when you say "this problem should flag" do you mean "it will" or "it should, but doesn't"?  The latter is what I experienced.

[Richard Forster]

As in -- it doesn't do it, but it should.  I had the same problem and was about ready to pull the trigger on electronic filing when I decided to take a second look.  As you previously mentioned, all the mortgage information goes in well prior to entry of personal deductions and the program testing for whether itemizing or taking the standard deduction is appropriate.  That's what I meant about the program either flagging a discrepancy once it applies the standard deduction or just automatically moving any entry on Lines 10 and 11 to Lines 16 and 17 when standard deduction is chosen.

[taliesinii]

Well, glad I'm not the only one who experienced this.  Does TT monitor these forums or should we put in a product suggestion / bug report somewhere?

[football236]

I'm having the same problem, but I don't see where in the step-by-step interview questions to

1. "NOT check the box to include the 1098 from your mortgage company"

2. enter excess mortgage interest and real estate taxes.

I was able to edit 8829 directly, but I'm trying to understand how to do this correctly via the interview.

[football236]

I found it. Here are details in case this helps others.

Summary: When you take the standard deduction, mortgage interest and real estate taxes should go on lines 16 and 17 of 8829 instead of 10 and 11. In order for this to happen, you need to take specific steps in the interview, namely:

• Business
• Business Income and Expenses
• Edit your business
• Business Expenses > Home Office Expense
• Edit your home office and answer the next ~12 questions.
• Then, I choose “I’ll enter actual expenses spreadsheet-style”.
• Then, the key screen appears, entitled “Let’s confirm mortgage interest applies to this home office”. It has a checkbox next to “Yes, include for this home office deduction”. It also has a line that says, “If you’re not itemizing deductions, uncheck the ”Yes, include for this home office deduction” box below.” Uncheck the box. Press “Done”.
• A few screens later comes one entitled, “Enter expenses for entire home”. On that screen, it says, “If you are not itemizing deductions, enter your mortgage interest as Excess Mortgage Interest, and your real estate taxes as Excess Real Estate Taxes.” Populate those two fields.

[Richard Forster]

You have it exactly right.  It is a bit confusing; you have to read the original mortgage entry screen very carefully to understand that mortgage interest should not be entered here if you are not itemizing deductions.  Good luck with your return

[football236]

Thanks for your reply and your help earlier in the thread, Richard.

[bilwerick]

Very helpful.  TurboTax should explain NOT to check this box if you are taking a standard deduction, or better yet, because this section will often be filled out before the decision on standard or itemized deductions is made,  it should monitor itself, ask for the whole hourse interest and taxes, not enter amounts on Lines 10 and 11 but on lines 16 and 17 if the standard deduction is taken.

[georgio]

Thank you for this post. I'm having this same problem in 2023 (after stumbling upon the IRS instructions right before I'm about to file) and it looks like TT has been doing it wrong on my taxes for years. This is a major fail. It implies it will handle it all automatically and it doesn't. Unless you hit "learn more" next to each line item, it never says this isn't allowed if you're taking the standard deduction. I will send feedback this year and hope they fix it. Not sure why such an obvious error doesn't come up in their "smart check". Makes me worried about everything else.

[KrisD15]

Does the expense carry to Form 8829 line 14? 

Is anything reported on line 16 and line 17?