What Tax Form Do I Need From My Mortgage Company?
Decipher the tax document you receive from your mortgage company. Learn its significance and how to apply it for accurate tax reporting.
When filing taxes as a homeowner, understanding the various documents received from your mortgage company is crucial. These forms provide key financial details necessary for accurate tax reporting and help ensure all eligible deductions are considered, which can affect your overall tax liability.
The Primary Tax Form from Your Mortgage Company
The main tax form homeowners receive from their mortgage company is Form 1098, the Mortgage Interest Statement. This document reports the mortgage interest and other related information paid by a borrower during the tax year. Lenders must send a separate Form 1098 for each mortgage if the interest paid totals $600 or more. Mortgage lenders are required to furnish this statement to borrowers by January 31st of the year following the tax year, providing data to potentially claim tax deductions.
Understanding the Information on Form 1098
Form 1098 contains several boxes detailing specific financial information related to your mortgage. Box 1 shows the total mortgage interest received by the lender from you during the year. Box 2 indicates the outstanding mortgage principal as of January 1st of the reporting tax year. Box 3 provides the original date your mortgage loan was issued.
If you overpaid interest in a prior year and received a refund or credit, Box 4 reports this amount. Box 5 reports any mortgage insurance premiums you paid during the year, which may be deductible under certain conditions. Box 6 reports any points paid on the purchase of your principal residence. Points are essentially prepaid interest and can sometimes be fully deductible in the year they are paid.
How to Use Form 1098 for Your Tax Return
The mortgage interest reported in Box 1, along with any deductible points from Box 6, are typically reported on Schedule A (Form 1040), Itemized Deductions. This can help reduce your taxable income if your itemized deductions exceed the standard deduction. Mortgage interest deductions generally apply to interest paid on a mortgage used to buy, build, or substantially improve your main home or a second home. There are limitations on the amount of acquisition debt for which interest can be deducted, generally capped at $750,000 for mortgages originated after December 15, 2017.
Points paid on the purchase of a principal residence can often be deducted in the year paid if certain conditions are met, such as the loan being used for your main home and the points reflecting a normal business practice in your area. Otherwise, points may need to be deducted ratably over the life of the loan. If your mortgage loan was transferred to a new servicer during the year, you might receive multiple Forms 1098, one from each servicer, covering the period they serviced your loan.
When You Might Not Receive Form 1098
You might not receive a Form 1098 from your mortgage company in certain situations. Mortgage companies are generally only required to issue this form if the total mortgage interest paid by the borrower during the year is $600 or more. Even if a Form 1098 is not issued due to the interest paid being less than $600, the interest may still be deductible for tax purposes. Homeowners who do not have an active mortgage on their property will also not receive a Form 1098, as there is no mortgage interest to report. For new mortgages or refinances, the amount of interest paid in the first year might be less than $600, particularly if the loan originated late in the year.
What to Do If You Haven’t Received Your Form
If you haven’t received your Form 1098 by the January 31st deadline, check your mortgage servicer’s online portal, as many make these forms available electronically. If the form is not available online, or you prefer a paper copy, contact your mortgage company or loan servicer directly for a duplicate. If you cannot obtain the form, you may be able to calculate the mortgage interest paid using your monthly mortgage statements. If a Form 1098 you receive contains incorrect information, contacting your servicer to request a correction is advisable.