Reportable Interest

Use Form 1098 to report only interest:

Worth $600 or more
Paid/received in the course of a trade/business
Not paid by a corporation, partnership, trust, estate, association, or company
Related to a qualified mortgage

Who Uses a 1098?

Lending institutions, government units, cooperative housing corporations, collection agents, and other recipients of interest payments (including foreign interest) must file Form 1098.^[1] Borrowers who are paying off a mortgage use the form to complete their annual tax returns.

Only mortgage interest earned in the course of a trade or business must be reported on Form 1098. If, for example, a developer provides financing to a home buyer and the home is the security for the obligation, then any interest earned in a tax year should be reported.

If, by contrast, a person lends money to another person to purchase their home, then the interest on that loan need not be reported because it was not a business-related activity.

Deadlines

The deadline for filing on paper is February 28, and the deadline to file electronically is March 31.^[2]

1098 Series

The 1098 forms are used to report tax-deductible expenses to the IRS. These include tuition and interest, and each 1098 is used to report specific expenses.

1098: Used to report interest payments related to a mortgage

1098-C: Used to report donations of vehicles, including automobiles and boats, to charitable organizations

1098-E: Used to report interest paid on qualified student loans

1098-T: Used to report tuition payments for post-secondary education

1098-MA: Used to report payments from the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets

1098 Form Parts (17)

Recipient’s Information

Enter the name, street address, city or town, state or province, country, ZIP code, and telephone number of the recipient of the interest payments, or lender of the obligation.

Recipient’s TIN

Enter the Taxpayer Identification Number (TIN) for the recipient of interest payments, also known as the lender. This can be a social security number, individual taxpayer identification number, adoption taxpayer identification number, or employer identification number.

Payer’s TIN

Enter the TIN of the payer of the interest, or borrower.

Payer’s Name

Enter the name, street address, city or town, state or province, and ZIP code of the payer, or borrower.

Tax Year

Enter the year for which interest is being reported, typically the previous calendar year.

Box 1: Mortgage Interest

Enter the amount of mortgage interest received from the payer. Do not include points; these will be entered into a different box.

Box 2: Principal

Enter the value of the outstanding mortgage principal as of January 1 of the current year. If the mortgage was acquired in the current year, enter the principal as of the date of acquisition.

Box 3: Origination Date

Enter the mortgage origination date. If the mortgage was acquired, enter the date of the mortgage origination for the original lender.

Box 4: Refund for Overpayment

Enter the amount of refund or credit on overpayment of interest.

Box 5: Insurance Premiums

Input the value of mortgage insurance premiums worth $600 or more.

Box 6: Points Paid

Enter the number of points paid upon purchase of the payer’s principal residence. Points are prepaid interest made on a loan as a means of decreasing the lending rate. They must meet certain criteria in order to qualify.^[3]

Box 7: Same Address?

If the address of the property securing the mortgage is the same as the payer’s address, check this box. Otherwise, leave the box unchecked and input the address on the next line.

Box 8: Description of Property

Enter the address or description of the property securing the mortgage. If there is no address, enter the Assessor Parcel Number, also known as the Property Identification Number (PIN), the Property Account Number, and the Tax Account Number.

Use the following formats:

Washtenaw County, MI
VV-WW-XX-YYY-ZZZ

Jackson County, MO
AA-BBB-CC-DD-EE-F-GG-HHH

Nashua, NH
XX-YY

Box 9: Number of Properties

Enter the number of properties securing the mortgage. Leave this box blank if only one property secures the mortgage.

Box 10: Other

Enter any other relevant information, such as the value of real estate taxes paid or insurance paid from escrow.

Box 11: Acquisition Date

Enter the date of acquisition if the mortgage was acquired in the calendar year. Otherwise, leave box 11 blank.

Account Number

Use an account number if a borrower has multiple accounts and is receiving more than one Form 1098.

Instructions for Filers (6 Steps)

1. Collect W-9

Use Form W-9 to collect the payer’s TIN, which can be a social security number or employer identification number.

2. Obtain Form

Next, obtain an official copy of Form 1098 from the IRS by ordering online.

3. Complete Form

Complete the form according to the instructions outlined above. See the IRS instructions for further details.

4. File with IRS

File Copy A of Form 1098 with the IRS either by mail, online via the IRIS eFile program, or by hiring a tax professional.

5. Send to Payer

Send Copy B of Form 1098 to the payer. The recipient of the form will use the information it contains to fill out their state and federal income tax returns.

6. Keep Copy C

Keep Copy C of Form 1098 for record-keeping purposes.

Frequently Asked Questions (FAQs)

Is all mortgage interest deductible?

No. The taxpayer must be the primary borrower and must be making payments on the mortgage for the interest paid to be deductible. Only the interest paid on the first $750,000 of a mortgage debt is tax-deductible.

IRS Form 1098