IRS Form 1098 Instructions
Step-by-step Form 1098 instructions can be downloaded by clicking this link. If you receive a mortgage interest of $600 or more in the course of your trade or business, you will be asked to file Form 1098, in order to report the said interest and certain mortgage insurance premiums, as well as reimbursements of an overpaid interest.
Only mortgage holders who paid at least $600 in interest for a single mortgage can qualify for a tax deduction. That is to say, if the homeowner has multiple mortgages and paid $600 in total interest, Form 1098 shall be filed only if the interest payment made on a single mortgage is $600 or above.
Taxpayers who deduct mortgage interest payments must itemize their deductions, which can be done on Schedule A. This is beneficial as long as the total value of itemized deductions is greater than that of the standard deduction.
A mortgage owner may also deduct points paid when they purchased real property. Points refer to a home loan interest paid in advance with the aim of improving the rate on the mortgage provided by the lender.
The IRS requires mortgage lenders to provide this form to borrowers if the property that secures the mortgage is considered real property and if the home for which the mortgage interest payments are made and the mortgage itself are qualified by the IRS standards. The due date for providing with this form to the borrower is January 31.
Forms 1098 on paper must be filed by February 28, 2020, or March 31, 2020, if filed electronically. Late filing penalties shall apply if the lender fails to file a correct information return by the due date without reasonable cause. The penalty is as follows:
- $50 per information return if you correctly file within 30 days (by March 30 if the due date is February 28);
- $110 per information return if you correctly file more than 30 days after the due date but by August 1;
- $270 per information return if you file after August 1 or you do not file required information returns.
Taxpayers who mail paper versions of their tax returns should enclose a Form 1096 with their statement. It is possible to file information returns electronically via the IRS Filing Information Returns Electronically (FIRE) system or the IRS Affordable Care Act Information Returns (AIR) program.
IRS 1098 Related Forms
- 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 a 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. These amounts 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 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 grants and scholarships received that may reduce the above-mentioned 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 taxes deductions based on the income received on top of the original investment.