The IRS Tax Form 1098 pertains to the mortgage interest statement of the Internal Revenue Service. Taxpayers use this form to report their interest amount and the related expenses paid during mortgage during the tax year. The mortgage interest should be greater than $600 to receive this IRS tax Form.
Purpose of IRS Form 1098- MORT
Lenders will use this IRS tax Form to report the interest payments they receive during the year. The interest payments should be more than $600. The IRS collects this tax information to ascertain the financial reporting of their lenders and other entities that receive interest payments. Homeowners will use this IRS tax Form to determine the total interest they have to pay for the year.
This 1099-MORT tax Form helps the taxpayers itemize their deductions. It helps them to claim deductions on mortgage interests. But they should be the primary borrower and be making active payments to reduce the mortgage interests.
Who can file a Mortgage interest statement through Form 1098?
Tax Payers who have paid $600 or more for the previous year, towards mortgage interest can file this Form. Their lenders will send them this tax Form. Such expenses can be considered as deductions from the federal income tax return. If they pay less than $600, then they will not receive Form 1098. Thus, it helps decrease the taxable income considerably and the overall tax amount owed to the IRS. The lender issues the IRS Tax Form 1068 to the entity that receives the interest, the borrower, by mail.
The mortgage interest Forms are sent by the lender to the mortgage seekers on their real property. Real property is any land or practically anything that is built on the land. Things that have grown on the land, or anything that attaches to it, also come under consideration. Houses, mobile homes, boats, and even co-operatives qualify as homes. Also, the mortgages should be qualified and include first and second mortgages, refinanced mortgages, home equity loans, etc.
How to reduce mortgage interest in the tax return?
Taxpayers can choose to itemize their deduction in Schedule-A Form. Accordingly, they will have to file their Tax Form 1098. Claiming deductions on the mortgage interest can reduce the total taxable income. But the taxpayer should be the primary borrower and be making the loan payments. They are limited to deducting interest on the total mortgage debt of $7,50,000 or less, for debts originating on or after December 16th, 2017.
Taxpayers will require a separate tax Form 1098 to decrease the mortgage interest they pay for their home loans in the current tax year. If they have more than one qualified mortgage, they will get a separate 1098 Form for each.
Taxpayers need not include the tax Form 1098 with their tax returns, as the IRS already receives this information. But to learn how much tax deduction you can claim on your mortgage interest, Tax2efile will help and guide you. They will also e-file the tax returns to decrease the hassle of mailing them to the IRS.