Paying the penalties for tax payer when proseries did not calculate the 1098 mortgage interest over $750K

Two issues here - you should have been aware of the rules and noticed the error in the final tax return review.  But we all miss things.That being said, it has always been my policy that if I screw up, I pay the penalty and interest, you pay the tax, becuase you would have paid the tax anyways if done correctly. Before you pay it, try to get out of it. I do not know if FTA (first-time abatement) will work on this particular issue (since I never had this issue) but it's worth a try.  https://www.irs.gov/payments/administrative-penalty-relief.

"Why can't the system direct us to the worksheet the moment we enter the balance greater than $750K?"

If youre entering an ending balance, aren't you already on the limitation worksheet?

I only have a couple of these, but, Ive just figured the limitation manually and just plug it in the appropriate amount directly on the Sch A.

Has a penalty even been proposed or assessed yet?  Has IRS initiated an audit, or did you catch the error?  Penalties are not assessed when tax is paid with an amended return.  Just interest.  

I have had the same issue. I disagree that you should have "caught this". This should be simple math. The program quite clearly says it is used to calculate the limitation. If you have to go thru each and every calculation to make sure it is correct them the software was both defective and useless and fails of its essential purpose.

I use the IRS worksheet

Given that i pay the penalty and interest on these type of issues. Though you could make an argument that they had use of the money so the interest is on them. I have had tax folk go both ways on that.