Navigating tax season can feel like a labyrinth, especially when you're dealing with multiple forms for the same type of income or deduction. But don't fret! If you've received two (or more) Form 1098s for mortgage interest, whether it's due to a refinance, your loan being sold, or even having multiple properties, TurboTax is designed to help you handle it.
This comprehensive guide will walk you through the process step-by-step, ensuring you accurately report your mortgage interest and maximize your eligible deductions. Let's get started, shall we?
Entering Two 1098 Forms in TurboTax: A Step-by-Step Guide
The process for entering multiple 1098 forms in TurboTax can vary slightly depending on why you received more than one. The most common reasons are:
Loan was sold to a new lender: Your mortgage was transferred from one financial institution to another during the year.
Refinanced your mortgage: You paid off an old loan with a new one.
Multiple properties: You have more than one property with a mortgage.
We'll cover the most common scenarios.
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| How To Enter Two 1098 Forms Turbotax |
Step 1: Gather Your Forms and Prepare for Entry
Before you even log into TurboTax, make sure you have all your Form 1098s organized. This will prevent errors and save you time.
Locate both 1098 forms: Ensure you have the original Form 1098 from your previous lender (if applicable) and the Form 1098 from your current lender.
Check for "Corrected" forms: If one of your forms has a "Corrected" box checked, only enter the corrected form and discard the uncorrected one. Do not enter both if one is a correction of the other.
Understand the "Why": Knowing why you have two 1098s (loan sold, refinance, multiple properties) will guide your answers within TurboTax.
Engage the User: Are you ready to tackle those 1098s? Let's make sure you have both forms in hand. Got them? Great! Now, let's dive into TurboTax.
Step 2: Navigate to the Mortgage Interest Section in TurboTax
Once you're logged into your TurboTax account:
Sub-heading: For TurboTax Online Users:
Sign in to your TurboTax account.
From the Federal Taxes (or Federal) tab on the left-hand menu, select Deductions & Credits.
Scroll down to the "Your Home" section.
Find "Mortgage Interest, Points, Refinancing, and Insurance" and click Start or Update.
QuickTip: Skim the first line of each paragraph.
Sub-heading: For TurboTax Desktop (CD/Download) Users:
Open your tax return in TurboTax Desktop.
Go to the Federal Taxes tab.
Click on Deductions & Credits.
Under "Your Home", select Start or Update next to "Mortgage Interest, Points, Refinancing, and Insurance."
Step 3: Entering Your First 1098 Form
This is where the actual data entry begins. TurboTax will guide you through a series of questions.
Sub-heading: Initial Entry of the First Form
Answer "Yes" to the question, "Did you pay any home loans in [Tax Year]?"
Follow the on-screen instructions to enter the details from your first Form 1098. It's often recommended to enter the earliest Form 1098 first, especially if your loan was sold or refinanced.
Sub-heading: Key Questions for the First Loan
Pay close attention to these questions, as your answers will determine how TurboTax handles the second form.
"Is this 1098 the most recent for your loan?"
If your loan was sold or refinanced during the year, you should answer "No" for the first (earlier) 1098. This tells TurboTax to expect another form for the same loan.
If this 1098 is for a separate property that you sold during the year, you might still answer "No" and indicate it was paid off.
"Was this loan paid off or refinanced with a different lender in [Tax Year]?"
If your loan was indeed paid off or refinanced, select "Yes." This is crucial for correctly tracking the loan's status.
Details on Points Paid: If your first 1098 shows points paid (Box 6), enter them. TurboTax will guide you on how to deduct them.
Step 4: Entering Your Second (and Subsequent) 1098 Form(s)
After you've entered the details for your first 1098, TurboTax will prompt you to add more.
Sub-heading: Adding a New Lender/Loan
On the "Your 1098 summary" screen (or "Home loans deduction summary" screen in desktop versions), you will see an option to "Add a new 1098" or "Add a Lender." Click on this option.
Enter the details from your second Form 1098.
QuickTip: Look for patterns as you read.
Sub-heading: Crucial Questions for the Second Loan
Again, careful attention to these questions is vital.
"Is this 1098 the most recent for your loan?"
If this is the final Form 1098 for a loan that was sold or refinanced, you should answer "Yes." This signals to TurboTax that you have provided all the necessary information for that particular loan's activity during the year.
If this 1098 is for a separate, active property, you would also typically answer "Yes."
"Is this loan a refinance of a previous loan?"
If you refinanced, select "Yes."
If your loan was simply sold to a new lender (not a refinance), select "No."
Points (Box 6) on the Second 1098:
If you only paid points on the original loan and not the new one (after a sale or refinance), do not re-enter points on the second 1098. TurboTax should combine the interest but avoid doubling the points deduction. If points are shown on both forms due to the way your lender reported them, enter them as they appear, and TurboTax should ideally adjust. However, if you suspect an issue, you may need to manually adjust in "Forms View" (Desktop only) or contact TurboTax support.
Step 5: Reviewing Your Entries and Addressing Potential Issues
Once you've entered both forms, TurboTax will compile the information.
Sub-heading: The "Your 1098 Summary" Screen
You should see both of your 1098 forms listed on this summary screen.
Verify the combined interest amount: Double-check that the total mortgage interest deduction displayed by TurboTax aligns with the sum of the interest reported on both your 1098 forms.
Check for limitations: If your total mortgage debt exceeds certain limits (e.g., $750,000 for acquisition debt for loans originated after December 15, 2017), TurboTax might limit your deduction. Pay attention to any messages about mortgage interest limitations.
Sub-heading: Common Pitfalls and Troubleshooting
"Box 2 - Outstanding Mortgage Principal" Issues: Sometimes, TurboTax might get confused if you enter the outstanding principal from both loans, especially if one was paid off or refinanced. For a loan that was paid off or refinanced, you might need to enter $0 for the outstanding principal in Box 2 for the old loan, as that loan no longer has an outstanding balance at the end of the year. This prevents TurboTax from incorrectly adding the principal balances of loans that weren't concurrent.
Points Deduction Errors: If you're seeing your points deduction disappear or appear to be double-counted, carefully review the questions related to points when entering each form. Ensure you've correctly indicated if points were paid on a new loan or if an old loan with amortized points was paid off.
TurboTax Community/Support: If you encounter persistent issues or believe the calculation is incorrect, the TurboTax community forum is a valuable resource. You can often find solutions to specific scenarios, or if needed, contact TurboTax support for personalized assistance.
Step 6: Proceeding with Your Tax Return
After successfully entering your 1098 forms and reviewing the summary:
Click "Done" or "Continue" on the mortgage interest summary screen.
Continue through the rest of the TurboTax interview, entering all other income and deductions.
Always run the "Smart Check" or "Review" feature in TurboTax before filing. This helps catch any potential errors or missed information.
By following these steps, you should be able to accurately enter two (or more) 1098 forms in TurboTax and ensure you claim all eligible mortgage interest deductions.
10 Related FAQ Questions about Entering Two 1098 Forms in TurboTax
Tip: Pause whenever something stands out.
Here are 10 common questions with quick answers to help you further:
How to: Handle two 1098 forms for a refinanced loan in TurboTax?
Enter the original loan's 1098 first, indicating it was paid off/refinanced and is not the most recent. Then, enter the new loan's 1098, indicating it is the most recent and a refinance of a previous loan.
How to: Enter two 1098 forms if my loan was sold to a new lender?
Enter the 1098 from the old lender first, indicating it was paid off/loan sold and is not the most recent. Then, enter the 1098 from the new lender, indicating it is the most recent for that loan.
How to: Avoid doubling my mortgage interest deduction with two 1098s?
TurboTax is designed to combine interest correctly when you follow the prompts regarding whether a loan was paid off, refinanced, or if the form is the "most recent." Ensure you answer these questions accurately.
How to: Correctly enter "points" if I have two 1098 forms due to a refinance?
Generally, you only enter points once, with the loan to which they apply. If the original loan had points that are being amortized, and the new loan has new points, enter each as reported. If the same points appear on both forms due to reporting quirks, enter them only with the original loan's information to avoid a double deduction.
How to: Handle Box 2 (Outstanding Mortgage Principal) with multiple 1098s?
Tip: Read actively — ask yourself questions as you go.
For a loan that was paid off or refinanced during the year and is no longer active, you might need to enter $0 in Box 2 for that specific 1098. The final, active loan should have its year-end principal balance or January 1st balance from its 1098.
How to: Enter two 1098 forms for different properties in TurboTax?
Treat each 1098 as a separate loan for a separate property. TurboTax will allow you to add multiple loans. Just ensure you correctly associate each loan with the correct property type (main home, second home, rental, etc.).
How to: Know if my mortgage interest deduction is being limited by TurboTax?
TurboTax will typically display a message or a calculation summary indicating if your mortgage interest deduction is being limited due to the $750,000 acquisition debt limit (or $375,000 for married filing separately).
How to: Find the mortgage interest section in TurboTax?
In TurboTax Online, go to "Federal Taxes" > "Deductions & Credits" > "Your Home" > "Mortgage Interest, Points, Refinancing, and Insurance."
How to: Delete an incorrectly entered 1098 form in TurboTax?
In TurboTax Online (and Desktop), look for "Tax Tools" or "Tools" in the left menu, then "Delete a form." You can select the specific 1098 entry to delete.
How to: Get help if I'm still having trouble entering multiple 1098s in TurboTax?
Utilize the TurboTax Help (question mark icons) within the software, search the TurboTax Community forum online, or consider contacting TurboTax customer support directly for personalized assistance.
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