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 1099 software > Learning Center > Guide to Information Returns

What is IRS Form 1098?

Definition

A great reason to own a home is the potential to deduct the interest on mortgage payments.

IRS Form 1098 is the form lenders are required by the IRS to send to mortgage borrowers that details the amount of mortgage interest received during the tax year, as well as and other expenses. Mortgage interest received during the year should be reported on line 10 of Schedule A of Form 1040 to reduce taxable income and the overall amount owed to the IRS.

There are several additional 1098 Forms:

1. 1098-C details the donations of vehicles (with a claimed value of more than $500), boats and airplanes
2. 1098-E is for the interest paid on qualified student loans
3. 1098-T details tuition and related fees during the year.

Each of these forms is filed with the IRS and specific information or amounts on each of the forms are added to your tax return, which can be used as deductions to reduce taxable income.

Who must file Form 1098

File Form 1098 (Mortgage Interest Statement) to report mortgage interest, including points, of $600 or more received by you, in the normal course of your trade or business, from an individual (including a sole proprietor). The $600 threshold applies to each mortgage.

Form 1098 due date

Copy B is due to the payer (the mortgage borrower) by the end of January. Copy A is due to the IRS by the end of February.  If you are filing electronically, you have until March 31 (an additional month) to file and you can seek also seek an extension of time to file.

How do I complete Form 1098?

Here's how to fill out the IRS Form 1098 correctly by the recipient/lender before it's sent off to the borrower:

  1. Check the "Void" or "Corrected" box at the top of the 1098 form if applicable. Enter the recipient's/lender's name, address and telephone number in the first box.

  2. Enter the recipient's Federal identification number and the payer's Social Security number in the two boxes beneath the first box. Below this, list the payer's/borrower's name, home address (including apartment number), city, state and ZIP code. Enter the account number that is associated with the interest payments.

    Show the amount of interest received from the Borrower in Box 1. This amount includes interest on any type of obligation secured by real property such as mortgages, lines of credit and more. In Box 2, list any points paid by the borrower when his principal residence was originally purchased.

  3. Step 5

    Note any refund of overpaid interest to the borrower in Box 3. In Box 4, show any mortgage insurance premiums the borrower paid that may qualify to be deductible mortgage interest. List any necessary additional information in Box 5, such as real estate taxes, the address of the property securing the debt or insurance paid from escrow.

  4. Step 6

    File Form 1098 with the IRS; also send a copy to the borrower or taxpayer. Check the IRS official website for specific instructions as to the filing deadline for Form 1098; it changes annually.

 

 

 

 

 

 

 

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