With tax season around the corner, and holiday bills to sort out, many homeowners are eager to get their mortgage interest statements so they can file early and get a tax refund asap. This article will help first-timers get a handle on the basics of this paperwork.
What is Form 1098?
You may have already guessed, but a standard Form 1098 is an IRS tax form used to report mortgage interest.
Mortgage interest on first and second homes is usually deductible for taxpayers who itemize deductions. This form may also tell you how much you paid for mortgage insurance and property taxes paid from escrow. If you have more than one mortgage, you may receive more than one Form 1098. You also may receive more than one Form 1098 if your loan was sold to another servicer. So, make sure you have all the paperwork you need before filing your taxes. Otherwise, you may need to file an amendment. All Form 1098’s need to be in the mail by January 31, 2018. You should receive it by mid-February. Reach out to your loan servicer or originator (if your loan was originated in 2017) if you still haven’t gotten it.
Upon receiving your Form 1098, you’ll want to pay close attention to Box 1, which reports the total amount of mortgage interest paid to your lender. Generally speaking, homeowners are able to deduct this amount from their taxable income, subject to certain restrictions. However, every situation is different and we recommend you check out the IRS guidelines (LINK) for more information on your specific situation.
While Form 1098 is only required to be provided to you if you paid $600 or more in interest to your mortgage lender in the previous year, you may still receive one if you paid less than $600 in interest.
If you’re really feeling eager, you can always calculate this interest on your own using our loan amortization calculator to get a general idea of what to expect. But we recommend using the data provided by your originator or servicer in your tax filings since there are a number of other variables that will determine the final amount.
What are the different types of 1098 tax forms?
The mortgage interest form is the standard type of 1098, however there are other versions of 1098 that you may receive as well.
- 1098-C – reports your tax deductible donations worth more than $500
- 1098-E – reports interest you paid on a student loan during the past year
- 1098-T – reports you how much you paid in tuition for a post-secondary education.
Final Thought: We hope this makes the 1098 Form crystal clear. Should you have any tax related questions, please contact your tax adviser.