What Is a 1098 Tax Form Used For?

The Form 1098 series of tax documents are information returns filed with the Internal Revenue Service (IRS). An information return provides data to both the taxpayer and the IRS about financial events that occurred during the tax year. The purpose of these forms is to document payments made by a taxpayer that could result in a tax deduction or credit. Businesses and other organizations that receive qualifying payments are required to issue the appropriate Form 1098 to the individual who made them.

Common Types of Form 1098

Form 1098, Mortgage Interest Statement

Homeowners paying interest on a mortgage will receive Form 1098, Mortgage Interest Statement. Lenders must issue this form if they receive $600 or more in mortgage interest from an individual during the year. Box 1 reports the total mortgage interest received, Box 2 shows the outstanding mortgage principal at the start of the year, and Box 6 reports any points paid on the purchase of a principal residence.

This form substantiates the amount of interest a homeowner can deduct, subject to certain limitations. For mortgages taken out after December 15, 2017, interest can be deducted on up to $750,000 of mortgage debt ($375,000 if married filing separately). For mortgages taken out on or before that date, the limit is higher, allowing for a deduction on up to $1 million of mortgage debt ($500,000 if married filing separately).

Form 1098-E, Student Loan Interest Statement

Individuals paying back student loans may receive Form 1098-E, Student Loan Interest Statement. Financial institutions that receive $600 or more in student loan interest from a borrower in a calendar year are required to send this form. Box 1 shows the total amount of interest received by the lender, which is used to claim the student loan interest deduction.

This is an “above-the-line” deduction, meaning a taxpayer does not need to itemize to claim it. The amount reported in Box 1 helps determine the potential deduction, which can reduce a taxpayer’s adjusted gross income (AGI). The maximum deduction for student loan interest is capped at $2,500 per year and is phased out for taxpayers with a modified adjusted gross income (MAGI) between $80,000 and $95,000 for single filers, and between $165,000 and $195,000 for those married filing jointly, based on 2024 figures.

Form 1098-T, Tuition Statement

Form 1098-T, Tuition Statement, is provided by eligible educational institutions to students. This form is used to help determine a taxpayer’s eligibility for education-related tax credits, such as the American Opportunity Tax Credit and the Lifetime Learning Credit. Box 1 of the form reports the total amount of payments received for qualified tuition and related expenses.

The amount in Box 1 does not automatically translate to the amount of the education credit. The form also reports scholarships or grants in Box 5, which reduce the amount of qualified expenses a taxpayer can use to calculate their credit. Taxpayers must use the information on Form 1098-T along with their own financial records to complete Form 8863, which is used to calculate these education credits.

Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes

When a taxpayer donates a vehicle, boat, or airplane to a charitable organization, they may receive Form 1098-C. This form is required if the claimed value of the donated vehicle is more than $500. The charity issues the form after it sells the vehicle, and the taxpayer’s deduction is limited to the gross proceeds the charity received from the sale, which is reported in Box 4c.

If the charity makes significant use of the vehicle or makes material improvements before selling it, the taxpayer may be able to deduct the full fair market value. These circumstances are indicated in Box 5 of the form.

Using Form 1098 Information on Your Tax Return

The information on the various 1098 forms corresponds to specific lines and schedules on Form 1040. For homeowners, the mortgage interest amount from Form 1098 is reported on Schedule A (Itemized Deductions). This schedule is used by taxpayers who choose to itemize rather than take the standard deduction, and the total from Schedule A reduces taxable income.

For those who paid student loan interest, the amount from Box 1 of Form 1098-E is used to calculate the deduction on Schedule 1 of Form 1040. Because it is an adjustment to income, this deduction can be taken regardless of whether the taxpayer itemizes.

The data from Form 1098-T is used to complete Form 8863, Education Credits. Taxpayers transfer the tuition payment information from the 1098-T to Form 8863 to calculate the exact amount of any eligible education credit. The final credit amount is then entered on the main Form 1040.

For charitable donations of vehicles detailed on Form 1098-C, the allowable deduction amount is reported on Schedule A under the section for gifts to charity. Taxpayers must attach a copy of the Form 1098-C to their tax return if the deduction claimed is more than $500.

Handling Discrepancies and Missing Forms

If you review a Form 1098 and find incorrect information, you should contact the entity that issued it, such as your mortgage lender or school. The issuer is responsible for providing accurate information and must issue a corrected form if an error is found. Corrected copies must be sent to both you and the IRS.

If you do not receive an expected Form 1098 by early February, first check any online portals associated with the institution, as many deliver these forms electronically. If the form is not available, contact the issuer directly to request a copy. If you cannot obtain the form, you may still be able to claim the associated deduction or credit using your own records, such as bank statements or canceled checks, as proof of payment.