The IRS Tax Form 1098 is for reporting Mortgage interest statements. It helps taxpayers report their interest and related expenses paid on a mortgage during the tax year. If the mortgage amount exceeds $600 or more, taxpayers use this form to report their interest amounts.\
The purpose of Form 1098
Moneylenders use Form 1098 to report their excess interest payments. If they receive more than $600 as interest payments for the tax year they use this form to report their income to the IRS. IRS collects this information and ascertains the appropriate financial reporting of the lenders who get interest payments.
Homeowners also use this tax form to determine the interest they pay for the year towards the mortgage. This Form helps them to calculate their mortgage interest deduction in their annual tax returns. For deduction mortgage interest, the taxpayer should be the primary loan borrower and be making active payments. The taxpayers seeking to itemize their deductions and plan to claim a tax deduction on mortgage interest, use the Form to calculate interest payments on the mortgage.
How to get a 1098 Mortgage interest statement?
Your mortgage lender will send you Form 1098 by 31st, January of the tax filing year. You can use this form to report the interest paid on a mortgage. And use the calculation to claim a tax deduction for the current tax year.
Taxpayers need not furnish Form 1098-mort with their tax returns. The IRS already receives the information that is given in the Form in advance. Taxpayers will use the information to deduct their mortgage payments.
You will get this Form from the lender if you have paid $600 or more towards the mortgage in the previous tax year. You will not receive this tax Form if your interest payments are less than $600. The IRS requires the mortgage lender to provide you with Form 1098 if you pay the mortgage for your real property. By real property, it means
- any land
- Buildings and structures on the land,
- anything that grows on it,
- or anything that attaches to the land.
IRS also defines the property that qualifies for mortgage interest. It is a space that has basic amenities, including a cooking and sleeping area, bathroom, and living amenities. Mobile homes, boats, house trailers, and co-operatives also qualify as a home. It is mandatory to qualify mortgage as well. It includes home equity loans and, refinanced mortgages.
How to deduct mortgage interest from the tax return?
The rules for deducting mortgage interest from tax payments depend on whether the taxpayer wishes to itemize their deductions on Schedule A. Claiming deductions for mortgage interest can reduce the total taxable income. But, the taxpayer should be the primary borrower of the mortgage loan. And be making the loan repayments. You can deduct interest on mortgage debt of up to $750,000 or less, if the debt originated on or after December 16, 2017. The limit for previous mortgages was one million.
E-file form 1098 to report mortgage interest and claim tax deductions to IRS within March 31st. If you have more than one qualified mortgage, you will get separate 1098 Forms. To learn more about this Tax Form and to file them on time, you can take help from Tax2efile, a credible and authentic tax-filing solutions provider.