Form 1098, Mortgage Interest Statement, is an IRA tax form that is used to report
mortgage interest a lender received during the year. Mortgage interest is the amount
of interest that the borrower pays in a year on a loan secured by real property.
The reported amount can include points paid by the borrower at the time of purchase
of a primary residence. The amount reported on Form-1098 includes Mortgage interest,
points, certain mortgage insurance premiums and reimbursements of overpaid interest.
Any person who is engaged in a trade or business and in the course of such trade
or business receives mortgage interest of $600 or more from an individual. The trade
or business need not be mortgage lending. Therefore, not only mortgage lenders but
any entity who receives mortgage interest, such as real estate developers, Servicers,
or certain collection agents need to file form 1098.
Form 1098 is required if the recipient receives mortgage interest and points of
$600 or more from an individual during a year. Points paid for the purchase of the
borrower's principal residence are reported on Form 1098 as well. For points to
be included in the Form 1098, they must be calculated as percentage of loan amount
and identified in the Settlement Statement (HUD-1) as “loan origination fee”, “loan
discount,” “discount points,” or “points.” Form 1098 is also required to be filed
if the amount of overpaid interest that was repaid to the borrower is $600 or more.
If the lender is required to furnish a Form 1098 because the lender received at
least $600 in interest then the lender must include the amount of overpaid interest
even if it the repayment was less than $600.
If you are required to file form 1098 you can file on paper. If filing on paper
Copy A of the Form 1098 must be filed with the IRS and Copy B of Form 1098 must
be provided to the borrower. You can use onlinefiletaxes.com to electronically file
form 1098. When you choose online filetaxes.com you’re a copy of your form 1098
is sent to the IRS electronically and borrower’s copy is mailed out.
Form 1098 is filed in the year following the year in which the mortgage interest
or points were received. The due dates are:
1. Copy A of the Form 1098 must be filed with the IRS by end of February 28 if filing
on paper. For electronic filing the due date is end of March.
2. Copy B of the Form 1098 must be provided to the borrower by end of January.
There are various penalties associated with failure to file 1098 forms correctly
and timely. These penalties apply to paper filers as well as to electronic filers.
There is penalty for failure to file, for filing late and for filing incorrect information.
For more information please refer to Penalty for failure to file form 1098.
Following information goes on form 1098:
RECIPIENT’S/LENDER’S name, address, and telephone number and RECIPIENT’S federal
tax identification number (TIN) that received the mortgage interest.
PAYER’/BORROWER’S social security number, name and address.
Box 1. Mortgage interest received from payer(s)/borrower(s): The total interest
received during the calendar year. The interest may be on a mortgage, a home equity
loan, or a line of credit or credit card loan secured by real property. Interest
includes prepayment penalties and late charges unless the late charges are for a
specific mortgage service. Interest does not include government subsidy payments,
seller payments, or certain prepaid interest.
Box 2. Points paid on purchase of principal residence: Points paid on the
purchase of the payer of record's principal residence.
Box 3. Refund of overpaid interest: Total refund or credit of a prior year(s)
overpayment of interest.
Box 4. Blank Box: This is an empty box where the IRS allows the lender to
enter any other information that would be reported to the payer, such as the address
of the property that secures the debt, real estate taxes, or insurance amount. Information
contained in Box 4 is not required to be reported to IRS.
Note: On this site we refer to recipient as the person who is entitled to
receive the 1099 form. In case of 1098 recipient is the lender, but borrower is
the person who receives the Copy B.
It is very easy to file using our service. First create your account by signing
up. Then create filer and recipient accounts. In the next step create your forms.
If you do not want to manually key in your information you have the option to upload
your data. Once you have created your form you should check out and accept our terms
of service. That is all you need to do.
After you submit your form we will file with the IRS and mail out recipient (borrower)
copies. If you have provided us recipient’s (borrower’s) email id, we would attempt
to deliver their copies by e-Delivery. Learn what us e-Deliver here. After your
forms are accepted by the IRS we send you a confirmation email.
If your form is already submitted to the IRS you will need to file corrected 1098
form. For more information on how to file a corrected return please
click here.
If the form was not supposed to be filed you will need to submit a corrected 1098
form with 0 amounts to void the form. For more information on how to file a corrected
return please
click here.