Mortgage Interest- Home Office Deduction & Personal Deduction

[rh4]

I originally entered my mortgage interest  and property taxes in the Business Home Office section. My home office is only 8.2% of the whole home, so I checked the box 'Yes' to have the rest of the mortgage interest deducted for the rest of the home.  

I  also originally added the 1098 Mortgage Interest & Property Tax information in the Personal Deductions section. At the end of that section, the Deductions and Credits 'Your Home Summary' correctly showed only the portion of the mortgage interest and property taxes that was left over after the home office percentage.

However, the Turbo Tax community forum states to NOT include the 1098 in the Personal Deductions if it was already included with the home office deductions.  So I went back to remove the Personal Deduction mortgage interest, and now the summary doesn't show the amount of mortgage interest that was left over from the home office deduction. It shows 'zero' deduction for home mortgage interest and property taxes, so it seems that I won't get the deduction for the left over amount.

Why would Turbo Tax ask for the mortgage interest & property taxes on the Personal Deductions section if it already allowed for the left over deduction somewhere else? Where would I find the left over credit for the mortgage interest and property taxes if it's not shown on the Personal Deductions & Credit section?

Thank you for your help.

[MichaelDC · Accepted solution]

Yes, enter your property tax and mortgage interest in the Home Office and remove it from the Deductions & Credits section. It's simpler to delete the 1098 and Home Mortgage Interest Worksheet.  After you do, step through the Home Office interview again to make sure it's still entered there.

*Please make sure you delete both forms (1098 and Home Mortgage Interest Worksheet) before re-entering information:

1.       In the upper right area of your screen, go to My Account >Tools.

·         If you're on a mobile device, you may need to sign in on a laptop or computer and reopen your return to see the My Account menu.

·         Still don't see it? Make sure your browser window is maximized by clicking the square in the extreme upper-right (between the __ and the X icons).

·         If you're still having problems, zoom out (reduce the font size) until the My Account menu appears.

2.       In the pop-up window, select Delete a form.

3.       Click delete next to Form 1098.

4.       Now click delete next to Home Mortgage Interest Worksheet.

5.       Next, manually re-enter your 1098 form:

·         For your personal home, search for 1098 and then click the "Jump-to" link in the search results.

TurboTax will then automatically calculate how much of this taxes and interest can be deducted for your home office. It will also add any remaining interest to Schedule A. See and example below.

Let's say you lived in the same home all year, and you used your home office all year. Let's also assume your home is 2,000 square feet and your home office is 200 square feet, so your office is 10% of your home. (See the attached screenshot below. Click to enlarge.)

You have a Form 1098 with $6,000 of mortgage interest in Box 1. Since your home office is 10% of your home, 10% of your interest, or $600, can be deducted on your home office. (See the attached screenshot below. Click to enlarge.)

If the "Yes, include for my home office deduction" box for your lender is checked, we'll assign $600 to your home office and automatically put the remaining $5,400 on your Schedule A as an itemized deduction. (See the attached screenshot below. Click to enlarge.)

You might ask yourself, "Well, I get the total $6,000 as a deduction even if I enter the whole amount as an itemized deduction. Why should I bother doing it here?"

The answer: Taking the part you're entitled to on your home office can help you save even more money on your taxes.

Here's why: Any amount you're allowed to deduct on your business not only reduces your income tax, but also reduces your self-employment tax. That's more money in your pocket!

[inquisitor]

Deleting the mortgage interest statement and the 1098 removes the mortgage interest total from my home office worksheet. Do I override that field on the form to manually enter that information?  Also, the property tax information is still on schedule A as a general deduction, and I don't want it there.  Do I manually override to delete that from schedule A?

[MichaelDC]

The home office may have been tied to the 1098. Enter that interest and the property tax directly through the home office interview.
Here's how to delete property taxes entered in the interview:
1.       Open (continue) your tax return.
(To do this, sign in to TurboTax and click the orange Take me to my return button.)
2.       In the search box, search for the exact phrase real estate, taxes (include the comma and space) and then click the "Jump to" link in the search results.
3.       Answer Yes to the question Did you pay property taxes in 2016?
4.       Enter/edit/remove your real estate taxes on the next screen.

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