What is Form 1098: Mortgage Interest Statement?
When paying $600 or more in mortgage interest and related charges throughout the tax year, taxpayers utilize IRS Form 1098, Mortgage Interest Statement. Property purchase points are associated with expenditures. Prepaid interest on a house loan improves the lender’s mortgage rate.
The Mortgage Interest Statement Form has two uses:
- Lenders record interest payments over $600 per year. The IRS gathers this information to ensure lenders and other interest-paying organizations report correctly.
- To calculate their mortgage interest deduction for their annual tax returns, homeowners use it to calculate their yearly interest paid.
Who receives Form 1098?
If you spent $600 or more in mortgage interest and points last year, your lender must deliver the Mortgage Interest Statement Form. Mortgage Interest Statement Form 1098 is not issued to those who paid less than $600. Deducting these costs from Schedule A of the federal income tax form decreases taxable income and the amount payable to the IRS. Lenders send 1098 to borrowers.
Mortgage lenders must furnish a 1098 to you if your property is considered genuine in the eyes of the IRS. Real property includes land and anything created, grown, or related.
Deducting Mortgage Interest Rules
Mortgage interest must meet IRS home criteria to be deducted. According to these requirements, a house has a kitchen, bathing, and sleeping facilities. Homes include houses, condos, mobile homes, boats, cooperatives, and trailers.
The mortgage must qualify. The IRS defines qualifying mortgages as first, second, home equity, and refinanced mortgages.
Itemizing deductions on Schedule A determines whether you require 1098. Mortgage interest deductions can reduce taxable income. However, mortgage interest deductions have some rules.
- The principal borrower must make loan payments.
- If the mortgage debt originated after December 16, 2017, you can deduct interest on $750,000 or less (earlier mortgage debt is $1 million).
If all of these apply, you need a 1098 to deduct mortgage interest for the current tax year. Receive a separate Form 1098 for each qualifying mortgage if you have many.
Claim Mortgage Interest Deduction
Since the IRS has received the Mortgage Interest Statement form, taxpayers don’t need to include it with their tax returns. Instead, use 1098 to deduct mortgage payments. To register your interest deduction, insert the form’s information into the proper fields on your electronic tax return.
You may be confused if you’re getting the Mortgage Interest Statement Form for the first time. Consider 11 boxes when analyzing your statement.
- Box 1: Received mortgage interest from the borrower This box indicates your annual lender interest.
- Box 2: Mortgage debt This box indicates the loan principal owed.
- Box 3: Mortgage start This reveals your mortgage’s start date.
- Box 4: Interest refund The refunded mortgage interest you overpaid will be listed here.
- Box 5: Mortgage insurance costs Enter private mortgage insurance or loan premiums here.
- Box 6: Principal residence purchase points This box displays mortgage points that you can subtract.
- Boxes 7–11 provide mortgage and property information.
Make sure your name, address, and tax ID number are correct on Form 1098.
Other 1098 Tax Forms
Several 1098 forms involve deductions. Forms 1098-C, E, and T are three further Mortgage Interest Statement Form variations.
Form 1098-C Form 1098-C lists gifts of cars, yachts, and airplanes to charities that donate or sell them at a discount. The beneficiary organization files and reports the gift date, vehicle type, VIN, and value. Form 1098-E Form 1098-E shows qualifying student loan interest paid throughout the tax year. The IRS will send the taxpayer a form showing the interest paid that year, which can be deducted. The lending institution sends it if the taxpayer has spent at least $600 in interest, although they may receive one for less. Form 1098-T Form 1098-T details annual post-secondary tuition and fees. The school files it, which you can use to compute education tax deductions and credits. Examples include the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). The form also lists school scholarships and awards that may diminish the taxpayer’s deduction or credit Form 1098-MA.
HFA Hardest Hit Fund recipients get 1098-MA to record these payments.
Why is a 1098 tax form used?
1098 shows mortgage interest paid in the preceding year. It helps taxpayers compute their mortgage interest deduction for the year.
How Do I Get My 1098 Form?
By the end of January, your mortgage lender will typically send Form 1098.
Need to file 1098?
There is no need to file Form 1098 or include it with your tax return. Enter the form’s interest amount. You usually record this interest when itemizing deductions on your tax return.
What is a College 1098 Tax Form?
Colleges and institutions report eligible tuition, scholarships, and grants on 1098-T. The school sends it to the IRS, and the student gets a copy. 1098-T helps taxpayers claim an education credit on Form 1040.
Do parents or students claim 1098-T?
They can, but not both. It usually depends on who pays the tuition and if the student still depends on the parent’s tax return. Parents frequently claim the education credit using 1098-T.
Mortgage Interest Deduction is an IRS form that informs borrowers of their one-year mortgage interest payments. Mortgage holders receive one in January and can deduct the interest on their tax return.
- One thousand ninety-eight report annual mortgage interest.
- Lenders must send $1098 to homeowners who paid $600 or more in mortgage interest during the tax year.
- You must be the principal borrower and make payments to deduct mortgage interest.
- If you itemize your deductions and want to deduct mortgage interest, 1098 helps determine the interest portion.
- Forms 1098-C, T, and E (charitable donations, credit for education payments, and student loan interest payments) are also 1098 tax forms.