What Is Form 1098 for Mortgage and Tuition?

Each year, taxpayers receive informational documents from the Form 1098 series, which are also sent to the Internal Revenue Service (IRS). These forms report payments made by an individual that could potentially result in a tax deduction or credit. Lenders, educational institutions, and other entities are required to issue them to individuals who have made qualifying payments throughout the year. This system of third-party reporting helps ensure that information on tax returns is consistent with the records of the organizations that received the money.

Decoding Form 1098 Mortgage Interest Statement

Form 1098, Mortgage Interest Statement, is sent by a mortgage lender to a borrower who paid $600 or more in mortgage interest during the tax year. This form summarizes the interest paid on a loan secured by real property, such as a house, condominium, or mobile home. Lenders are required to send this form to borrowers by January 31 of the year following the tax year.

Box 1 shows the total mortgage interest received by the lender, not including points, which are reported separately. Box 2 displays the outstanding mortgage principal at the start of the year, and Box 3 indicates the mortgage origination date.

Box 4 shows any refund of overpaid interest from a prior year. Box 5 reports the amount of mortgage insurance premiums paid, although the tax deduction for these premiums has expired. Box 6 reports the points paid on the purchase of a principal residence. These points are a form of prepaid interest and may be deductible in the year of purchase.

Box 7 is checked if the property’s address is the same as the borrower’s mailing address, while Box 8 provides the property’s address if it is different. Box 10 includes other information the lender needs to report. Box 11 shows the mortgage acquisition date if it occurred during the year.

Decoding Form 1098-T Tuition Statement

Form 1098-T, Tuition Statement, is provided by eligible educational institutions to students who paid for qualified tuition and related expenses. Schools must send this form by January 31 of the following year. Receiving a Form 1098-T does not guarantee eligibility for an education tax credit.

Box 1 reports the total payments the institution received for qualified tuition and related expenses. Qualified expenses include tuition and fees required for enrollment but exclude charges for housing, meal plans, or health insurance.

Box 5 shows the total amount of scholarships or grants administered by the institution, including those from the school, government, and private organizations. This value reduces the amount of qualified expenses used to claim a tax credit, as you cannot claim a credit for expenses paid with tax-free educational assistance.

Box 4 shows adjustments for a prior year’s qualified tuition, such as a refund. Box 6 reports adjustments to scholarships or grants from a prior year. A check in Box 7 indicates the amount in Box 1 includes payments for an academic period beginning in the first three months of the next year.

Boxes 8 and 9 provide information about the student’s enrollment status. Box 8 is checked if the student was enrolled at least half-time for one academic period, and Box 9 is checked if the student was a graduate student. This information helps determine eligibility for specific education credits, which have different rules based on enrollment status.

Applying Form 1098 Information on Your Tax Return

The information from Form 1098 and 1098-T is used to claim specific deductions and credits on your tax return by entering the amounts on the correct tax schedules.

The mortgage interest from Box 1 of Form 1098 is used for the mortgage interest deduction. This deduction is for taxpayers who itemize on Schedule A (Form 1040) instead of taking the standard deduction. For homes purchased after December 15, 2017, the deduction is limited to interest on up to $750,000 of mortgage debt.

Information from Form 1098-T is used to claim education credits on Form 8863. To calculate the credit, you start with the tuition payments in Box 1 and subtract the scholarships and grants from Box 5. The result is the net amount of out-of-pocket expenses that may qualify for a credit.

The American Opportunity Tax Credit is for the first four years of postsecondary education and is worth up to $2,500 per student. The Lifetime Learning Credit applies to undergraduate, graduate, and professional courses and is worth up to $2,000 per tax return.

A related form, Form 1098-E, Student Loan Interest Statement, reports interest paid on a student loan. You should receive this form if you paid $600 or more in interest. This interest can be claimed as a deduction on Schedule 1 of Form 1040, is capped at $2,500 per year, and is subject to income limitations.

Handling Discrepancies and Missing Forms

If you find incorrect information on a Form 1098 or 1098-T, such as a wrong Social Security Number or dollar amount, contact the issuer directly. For Form 1098, contact your mortgage lender; for Form 1098-T, contact the educational institution. The issuer can provide a corrected form.

If you do not receive a form by the January 31 deadline, first check the issuer’s online portal, as many make forms available electronically. If the form is still not available, contact the issuer to request a copy.

If you cannot obtain a form, you are still responsible for reporting the correct information on your tax return. Use your own financial records, like mortgage or bank statements, to determine the accurate amounts paid. You should document how you calculated these figures in case the IRS has questions.