Form 1098 is an IRS form that shows how much interest you have paid in one year on a qualified home mortgage. It can be used to figure out a mortgage interest deduction, which lowers your federal tax bill. The form is issued by your lender in January if you’ve paid $600 or more in mortgage interest over the past year.
What is Form 1098?
Form 1098, Mortgage Interest Statement, is an Internal Revenue Service (IRS) form used to report the amount of interest paid on a mortgage during the tax year. Those who paid $600+ in interest on a qualified home mortgage are required to receive Form 1098 from their lender. This form is needed to determine the amount of interest paid that can be used for deducting taxable income on a federal income tax form (Schedule A) and consequently reduce the amount owed to the IRS. Other 1098 forms include Form 1098-C (charitable contributions), Form 1098-E (student loan interest payments), and Form 1098-T (credit for education payments). Receiving Form 1098 and taking advantage of mortgage interest deductions can greatly reduce the amount of income taxable each tax year.
IRS Form 1098 – Who Needs to Fill It Out?
Form 1098: Mortgage Interest Statement is an IRS document required to be sent to borrowers when they have paid $600 or more in interest on a mortgage during the tax year. It is used to report interest payments and relieve some of the burden of proof to taxpayers for deductions related to home loans. With the Form 1098, borrowers can determine their total mortgage interest payment for the year and claim the payments as a deduction on their Schedule A Form. In order to be eligible to use the form towards a deduction, the borrower must have made the payments on the loan they are reporting, and the debt must conform to the qualifications set about by the IRS. The document is issued by the lender at the end of January and can aid in reducing the amount of taxes owed.
Step-by-Step: Form 1098 Instructions For Filling Out the Document
Understanding Form 1098 is important if you want to claim a mortgage interest deduction, as the form provides key tax information related to the mortgage. To deduct mortgage interest, the individual must be the primary borrower on the loan and actively making payments; they’re also limited to deducting interest on total mortgage debt of $750,000 or less. Lenders must issue Form 1098 when the homeowner has paid $600 or more in mortgage interest during the tax year, and the form should arrive by the end of January. When filing, you must enter the information from Form 1098 into the correct fields on your tax return to declare your mortgage interest deduction. It is important to verify accuracy of your personal information, including your name, address, and tax ID number, before filing. As well as Form 1098 there are several other 1098 forms related to deductions.
Below, we present a table that will help you understand how to fill out Form 1098.
|Information Required for Form 1098||Details|
|Name||Individual’s full name|
|Address||Current mailing address|
|Tax ID Number||Unique tax identification number|
|Mortgage Interest Paid||Total amount of mortgage interest paid|
|Lender’s Information||Name and contact details of the mortgage lender|
Do You Need to File Form 1098 Each Year?
If you plan to itemize your deductions on the Schedule A form and you are the primary borrower and actively making payments on the mortgage, you need Form 1098 each year to deduct the mortgage interest you paid on your home loan. You will receive a Form 1098 from your mortgage lender for each qualified mortgage, and the IRS requires the mortgage lender to provide Form 1098 to you if your property is considered real property. This form is used to report mortgage interest payments in excess of $600 made to the lender during the tax year, helping you calculate the amount of your mortgage payments that have gone towards interest.
Download the official IRS Form 1098 PDF
On the official IRS website, you will find a link to download Form 1098: Mortgage Interest Statement. However, to make it easier for you, we are providing the link in our article, which comes directly from the official irs.gov website! Click to download: Form 1098