TurboTax - Does not seem to handle Mortgage Interest on a HELOC correctly

[G-Man]

I take out a HELOC last year on my primary residence and received a 1098 form. The money was not used to improve my primary residence but for something else. For some reason, TurboTax is still allowing me to deduct the mortgage interest on the HELOC. During the walkthrough of this section, I indicated it was not used to improve my primary residence.

Has anyone else seen this issue in TurboTax? Please advise.

FYI. I did receive a separate 1098 form for the 1st mortgage as well.

 

[G-Man]

I take out a HELOC last year on my primary residence and received a 1098 form. The money was not used to improve my primary residence but for something else. For some reason, TurboTax is still allowing me to deduct the mortgage interest on the HELOC. During the walkthrough of this section, I indicated it was not used to improve my primary residence.

Has anyone else seen this issue in TurboTax? Please advise.

FYI. I did receive a separate 1098 form for the 1st mortgage as well.

When entering the 1098 form for the HELOC, I answered "No" to this question.,

 

[G-Man]

On this screen, I entered "0" in the first box, and the balance of the loan in the second box.

 

[PaunchyPirate]

Looks like it was a problem last year as well. No fix is provided in this thread, but it seems to match what you are seeing, I think.

HELOC Interest is not correctly determined for the case where the loan is not used only to buy, build, improve the loan securing property.

This seems like a problem that would have been discovered by others by now but alas, I could not find any pertinent posts. I have no mortgage per se on my primary residence but I have a HELOC secured by my primary residence that I use from time to time as a cash flow solution. The TurboTax...

ttlc.intuit.com

 

[G-Man]

Looks like it was a problem last year as well. No fix is provided in this thread, but it seems to match what you are seeing, I think.

HELOC Interest is not correctly determined for the case where the loan is not used only to buy, build, improve the loan securing property.

This seems like a problem that would have been discovered by others by now but alas, I could not find any pertinent posts. I have no mortgage per se on my primary residence but I have a HELOC secured by my primary residence that I use from time to time as a cash flow solution. The TurboTax...

ttlc.intuit.com

Yes. That's the exact behavior I'm seeing in TurboTax. Thanks for the link.

 

[G-Man]

Would you recommend not entering the 1098 for the HELOC in TurboTax?

 

[SecondCor521]

Would you recommend not entering the 1098 for the HELOC in TurboTax?

That'll work. Other options that seem silly to me but would also work:

1. Ask for TT to fix the bug and then wait for the fix.
2. Use a different tax prep software.

The IRS will get the 1098 for the HELOC, but they don't require you to report it because, as you obviously know, it may not be deductible. Even in cases of deductible mortgage interest, the taxpayer may not have enough to itemize, so there would be no need to file Schedule A anyway.

 

[G-Man]

That'll work. Other options that seem silly to me but would also work:

1. Ask for TT to fix the bug and then wait for the fix.
2. Use a different tax prep software.

The IRS will get the 1098 for the HELOC, but they don't require you to report it because, as you obviously know, it may not be deductible. Even in cases of deductible mortgage interest, the taxpayer may not have enough to itemize, so there would be no need to file Schedule A anyway.

I am itemizing this year so it would help.

 

[Jerry1]

Would you recommend not entering the 1098 for the HELOC in TurboTax?

That's what I would do. You're aware that it's not deductible so even though the tax software is not handling it correctly, by not entering it, you are getting the correct outcome. The one thing I don't like about that method is if it were something deductible for other reasons - like a MAGI calculation for one of the credits.

 

[G-Man]

That's what I would do. You're aware that it's not deductible so even though the tax software is not handling it correctly, by not entering it, you are getting the correct outcome. The one thing I don't like about that method is if it were something deductible for other reasons - like a MAGI calculation for one of the credits.

wow. I'm in a dilemma because it does help me in itemizing. However, I don't want to report false information to the IRS.

 

[Jerry1]

It only helps in itemizing if you incorrectly include it. That’s not the situation I was trying to convey.

 

[G-Man]

It only helps in itemizing if you incorrectly include it. That’s not the situation I was trying to convey.

No problem. I understand. Thanks

 

[SecondCor521]

Agree with Jerry1 - the TT bug is giving you a tax benefit to which you're not legally entitled. You need to either leave it off, wait for TT to fix the bug, or use different software.