What Are 1098 Tax Forms?
The IRS Form 1098 series is a set of five forms related to taxable income deductions. Each of these forms reports different interests, expenses, or other contributions, depending on the transaction made by the payer of the previous tax or calendar year. The 1098 form must be generated by the payee of such amounts (who might be a borrower, an insurer, or a qualified school, among others), who is required to file it with the Internal Revenue Service (IRS). The appropriate payment amounts may be deductible from the payers’ taxable income. There are different types of 1098 forms based on the transaction that is being reported, and they are explained below in this text.
What Are the Different Types of 1098 Forms?
- IRS Form 1098, Mortgage Interest Statement. This is a form that reports the amount of interest and related expenses that an individual or sole proprietor paid on a mortgage during a tax year for estimating their tax deductions.
- IRS Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes. It details the donations of automobiles, boats, and airplanes made to charitable organizations, and it is filed and reported by the recipient organization, so that the donor can claim a donation tax deduction.
- IRS Form 1098-E, Student Loan Interest Statement. This form reports the interest amount that was paid on qualified student loans during the tax year. This amount can be deducted by the taxpayer on their income tax return.
- IRS Form 1098-T, Tuition Statement. This statement provides information about qualified tuition and related fees paid during the tax year. It is filed by the educational institution and can be used to calculate education-related tax deductions and credits. It also reports any scholarships and grants received that may reduce said deductions or credits.
- IRS Form 1098-Q, Qualifying Longevity Annuity Contract. This form is filed by the person who issues a contract intended to be a Qualifying Longevity Annuity Contract (QLAC), so that the annuity holder can claim distribution tax deductions based on the income earned on top of the original investment.
What Are 1098 Forms Used for?
IRS 1098 Forms are used for declaring the amounts paid or the donations made during the previous tax or calendar year by a payer or donor, who may use these amounts to claim deductions on their taxable income.
The appropriate payee institution or individual, depending on the type of form, is required to file Copy A with the IRS and to furnish Copy B, C, or a statement reflecting the same information as in copy A to the payer (who, depending on the type of form, may be a borrower, a debtor, a donor, a student, or a participant). This Copy B, C, or statement needs to be furnished around tax time. The reason for this is to allow the payer to use the numbers reported to the IRS when preparing their taxes, so that they may claim the appropriate tax deductions. Processing the 1098 Forms and mailing them to the payers is mandatory for all those who fall under the categories specified by the IRS. The specifications for each form can be found at the IRS website, and anyone generating these forms needs to learn the regulations in order to do so.
All information returns filed on paper must be sent along with Form 1096, Annual Summary and Transmittal of U.S. Information Returns, and will be filed with only three IRS Centers: Austin, TX; Kansas City, MO; and Ogden, UT.
This form is used to report a mortgage interest paid by an individual or sole proprietor during a tax year to the government, in order to receive a mortgage interest deduction on the borrower's federal income tax return.
File this form if you are in charge of a contract intended as a Qualifying Longevity Annuity Contract (QLAC), so that the annuity holder can claim deductions on their distribution taxes.
Download this form if you are an educational institution and need information about qualified tuition and related fees paid during the tax year. The information can be used by the paying student to calculate their education-related tax deductions and credits.
This form lists and details the donations of automobiles, boats, and airplanes made to charitable organizations. It is filed with the Internal Revenue Service (IRS) by the recipient organization.
Download this form to report the interest amount paid on a qualified student loan during the past calendar year in cases when the amount exceeded $600.