Turbotax inexplicably reducing my mortgage interest deduction for 2021

[TomH1959]

I refinanced my primary home mortage in December 2020 with a loan balance of $473,000.  My interest for 2021 was $12,053 (i.e., Form 1098 from my lender).  I entered this amount in Turbotax and that amount shows up in Turbotax on the Home Mortgage Interest Worksheet (line 2a); however, when I look at Schedule A in Turbotax it has the amount on line 8a as $5965?  Why is Turbotax showing a lower amount?

[RaifH]

When you refinanced in 2020, did you take cash out of your home or was it a straight refinance? If any of the loan was used for a purpose other than home acquisition or to substantially improve the home, that portion of the interest would not be deductible. If that is not the case, and this loan was your only mortgage being reported, then the entire $12,053 should be deductible as you are well under the limit of $750,000 before mortgage interest starts to be reduced. Verify your entries into TurboTax to make sure everything is correct. If it is still limiting your mortgage interest, you may want to delete Form 1098-A and re-enter it:

1. In the Federal > Deductions & Credits section of your return, scroll down to Your Home and click Revisit/Start next to Mortgage Interest and Refinancing (Form 1098)
2. Edit your existing mortgage
3. Answer the questions and enter or verify the information as it appears on your 1098. Make sure you have both the box 1 amount and the property taxes if they are reported on the form.
4. Answer What kind of property is this loan secured by?
5. Answer We didn't pay any points .
6. Answer Yes to Let's see if this is the most recent form for this loan.
7. Answer No to Is this the original loan used to buy your property?
8. Yes to Is this loan a HELOC or a refinance? 
9. Answer Did you take cash out? If the answer is yes and you did not use the cash to improve the home, then that portion of the mortgage's interest will not be deductible because it is not considered home acquisition debt. 

[TomH1959]

RaifH,

I think I've figured this out.  I claimed part of my home as a self-employed business expense.  So Turbotax computed the home mortgage interest applicable to my business (Form 8829) for inclusion on Schedule C.  It then put the remaining mortgage interest on Schedule A, line 8b.  The bad news is Turbotax does not explain this, nor does it update the Home Mortgage Interest Worksheet accordingly.  This is a bug in Turbotax.  I had to figure this out manually, i.e., I multiplied the % of home square footage used for business times the total mortgage interest, and the remaining mortgage interest -- the portion not allocated to business use -- matched the figure on Schedule A, line 8b.  

In any case, thank you for your reply.