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How do I claim mortgage interest?

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How do I claim mortgage interest?


If you paid $600 or more of mortgage interest (including certain points) during the year on any one mortgage, you generally will receive a Form 1098, Mortgage Interest Statement, or a similar statement from the mortgage holder.

You should receive the statement for each year by January 31 of the following year. A copy of this form will also be sent to the IRS.  The statement will show the total interest you paid during the year. If you purchased a main home during the year, it also will show the deductible points paid during the year, including seller-paid points. However, it should not show any interest that was paid for you by a government agency.

As a general rule, Form 1098 will include only points that you can fully deduct in the year paid. However, certain points not included on Form 1098 also may be deductible, either in the year paid or over the life of the loan.

Prepaid Interest on Form 1098
Report prepaid interest (other than points) only in the year in which it properly accrues.

Interest received on December 20, that accrues by December 31 but is not due until January 31, is reportable on the Form 1098.

Exception: Interest received during the current year that will properly accrue in full by January 15 of the following year may be considered received in the current year, at your option, and is reportable on Form 1098 for the current year. However, if any part of an interest payment accrues after January 15, then only the amount that properly accrues by December 31 of the current year is reportable on Form 1098 for the current year.
For example, if you receive a payment of interest that accrues for the period December 20 through January 20, you cannot report any of the interest that accrues after December 31 for the current year. You must report the interest that accrues after December 31 on Form 1098 for the following year.

Refunded Interest
If you received a refund of mortgage interest you overpaid in an earlier year, you generally will receive a Form 1098 showing the refund in box 3.

How to Report
Answer the questions to the interview questions and we will fill in the information for you.

If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on line 10. Attach a statement explaining the difference and print "See attached" next to line 10. Please note that you will not be able to use our service to do this. You will have to paper file.

If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and social security number (SSN) or employer identification number (EIN) on the dotted lines next to line 11. The seller must give you this number and you must give the seller your SSN. A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Failure to meet any of these requirements may result in a $50 penalty for each failure.

If you can take a deduction for points that were not reported to you on Form 1098, deduct those points on line 12 of Schedule A (Form 1040).

For more information, please see Form 1098 Instructions.

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Views: 746 Created on: Jun 15, 2013
Date updated: Aug 21, 2015
Posted in: Deductions

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