Does TurboTax calculate the mortgage interest deduction correctly? My 2022 federal tax return was audited. It appears that Schedule A has a larger deduction than allowed.

Forum|Forum|1 year ago
March 28, 2025
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I have 2 mortgages and both have a date of origination of 2021, which means that my mortgage deduction is capped at the $750,000 loan limit (married filing jointly. However, Turbotax does not calculate a reduced mortgage interest deduction given that my mortgage total is larger (combined $1.3M). The Schedule A that is generated by Turbotax shows a deduction of the entire mortgage interest. This is why I got audited and the IRS says I owe them $13K.

fanfare

There have been complaints.

you should use Pub 936 to do the calculaton yourself, if you want to dispute the IRS adjustment.

@fernando.miralles.wilhelm

fernando.miralles.wilhelmAuthor

Thank you. When I spoke to the IRS, they suggested I do the same through Pub 936.

However, it is baffling that this mistake is made by the TurboTax calculations, and that in trusting the software (after all, it "checks for errors"), you end up filing a tax return that has a glaring error.

Given that, I will submit amended returns for 2023 and 2024 (not through TurboTax) and not use TurboTax any more going forward. This is bad!

MonikaK1

If you were able to deduct all of your mortgage interest for 2022 but should have had a limitation applied because you took the loan out after December 15, 2017, and your outstanding debt was larger than $750,000, you could have been affected by an issue within TurboTax at that time. However, TurboTax did run a study and notified users who appeared to have been affected. The debt limit is working for Federal returns for 2023 and beyond.

See this help article regarding the 2022 issue. It has instructions on how to amend 2022; however, you shouldn't file an amended return if the IRS is currently auditing the issue. You could prepare one to compare the results with any proposed IRS adjustment.

TurboTax calculations are guaranteed. If your situation meets the terms of the 100% Accurate Calculation Guarantee, Intuit will reimburse the amount actually paid by you to the IRS or state in penalties and/or interest as levied against you in their first notice (i.e., if the notice is not paid, Intuit will not reimburse additional interest and penalties for not paying the first bill timely).

Claims can be filed online here. If you file a 2024 claim and the drop-down menu of years doesn't show 2024 yet, you can choose "2023" and the Accurate Guarantee team will consider your claim.

For mortgages acquired after December 15, 2017, taxpayers can write off interest paid on indebtedness of $750,000 or less. If mortgage indebtedness exceeds $750,000, only a percentage of the interest can be deducted.

See IRS Publication 936 for more details about the mortgage interest deduction.

@fernando.miralles.wilhelm

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