If you pay interest on a mortgage, you can expect to receive a copy of IRS Form 1098 from your mortgage company soon after the first of the year. This "Mortgage Interest Statement" is a tax form that the Internal Revenue Service calls an "information return." It's provided so that you can prepare your taxes accurately.
Interest you pay on your home mortgage is tax-deductible, and Form 1098 lists several key pieces of information for calculating the size of your deduction. Box 1 tells you how much money you paid in mortgage interest during the previous calendar year. Box 2 tells you how much you paid in "points" when you bought your home. Points are a form of prepaid interest -- 1 point equals 1 percent of the loan amount -- and points reported to you on Form 1098 are also tax-deductible. Box 3 of the form tells you whether your mortgage company refunded any overpayment of interest from prior years. If you get such a refund, you must report it as income on your tax return. That way, you don't have to go back and file amended returns for the prior years.
Though they are not required to, lenders frequently include other important information on Form 1098. If you paid premiums for mortgage insurance, which are usually tax-deductible, the amount you paid may be listed on the form. If your mortgage company handles your property tax payments for you -- a common practice -- it may use Form 1098 to report the total amount paid, which is also tax-deductible. The form may also show any homeowner's insurance premiums that the mortgage company paid on your behalf; these are generally not deductible, however.
Any lender to whom you paid more than $600 in mortgage interest during the year is required to send you a copy of Form 1098. Further, any lender that refunded more than $600 in overpaid interest from a previous year must also send you a 1098, regardless of whether you paid that company any interest for the current tax year.
Under IRS rules, any lender who is obligated to send you a copy of Form 1098 must do so by January 31. Lenders must also send a copy of the form to the IRS, so that the tax agency can match what you report paying with what the mortgage company says you paid. Any lender that has more than 250 forms must submit them to the IRS electronically. Electronic submissions are due by March 15. If a lender is sending paper forms, the deadline is February 28.
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