Is my mortgage "outstanding loan balance" the same as the "outstanding principal balance"?

[BlakeT20]

I'm getting a question after inputting my 1098, asking "What was the outstanding loan balance on January 1st, 2022? If you paid this off in 2021 enter the balance on the day you paid it off"  I have not paid it off. My question is the "outstanding loan balance" the same as my "outstanding principal balance"? And if so, why is it asking for the information again when I entered my "outstanding principal balance" as noted in box 2 of my 1098 already. 

Online, I saw a similar question asked and the answer was that the "outstanding loan balance" is different because it includes interest, etc. but when I reached out to my Mortgage lender, they said it's the same. 

Any clarification/help is much appreciated. 

[DaveF1006]

Yes your outstanding loan balance and outstanding principle balance are different because of the reasons that you have already mentioned. For an intensive purposes though, your principle balance is whatever your payoff balance for the loan is if you were to pay it off today, which is different from the outstanding loan balance if you were to pay it off when the last payment is due.

[BlakeT20]

Thanks for the quick response, Dave. 

To clarify, does that mean I should be looking for the amount that represents: 

1. Principal balance (on January 1st, 2022) PLUS

2. Interest I have not paid on the loan, if I was to hold onto the loan till maturity? 

I'm speaking to the Mortgage lender again and they don't seem to understand the request, saying they don't have that number. They can send me an estimate based on amortization. Does that sound correct? 

[LenaH]

The amount you enter is the principal balance as of January 1, 2021. You do not have to add the outstanding interest on the loan that will be paid if you held onto it until maturity. 

You can get this information on your mortgage statement as of January 2021 or your amortization schedule provided by the mortgage lender. They should be able to be to provide a close estimate based on the amortization schedule they are referring to. 

@BlakeT20

[BlakeT20]

Thanks, LenaH. 

One more question. Did you mean January 1, 2022 not 2021? 

[JulieS]

No, the program asks for the balance as of the first day of the tax year, or the first day of the loan, whichever is later. So in this case it is the balance on January 1, 2021. 

[BlakeT20]

Hi, but the question specifically calls out January 1, 2022. 

Here's exactly what it says, "What was the outstanding loan balance on January 1st, 2022? If you paid this off in 2021 enter the balance on the day you paid it off." 

Sorry for questioning, just want to make sure I'm inputting the correct number. 

Thanks,

Carter

[DaveF1006]

To clarify, do you just have one 1098?

@BlakeT20

[BlakeT20]

Hi Dave - yes, I only have one 1098. 

[RaifH · Accepted solution]

Yes, input your loan balance as of January 1, 2022. TurboTax determines your average loan balance if it is above $750,000 or $1 million for loans on homes purchased before December 15, 2017.

The method to determine average loan balance follows the IRS method of taking the average of the first and last balance for the year. The Outstanding Mortgage Principal in Box 2 of Form 1098 reflects your loan balance on January 1, 2021. You input the balance as of January 1, 2022. TurboTax calculates the average balance and limits your deductible mortgage interest based on that number. 

[BlakeT20]

Hi RaifH, 

Okay that makes sense. Thanks for confirming and explaining the situation. 

Carter