What Tax Form Is for Mortgage Interest?

Owning a home often involves significant expenses, and for many homeowners, the interest paid on a mortgage can represent a substantial amount each year. The Internal Revenue Service (IRS) recognizes this expense, allowing taxpayers to potentially reduce their taxable income by deducting qualified mortgage interest. Proper documentation is necessary to claim this deduction accurately on a tax return.

Identifying the Mortgage Interest Statement

The primary tax form used to report mortgage interest is IRS Form 1098, “Mortgage Interest Statement.” This form is issued by a mortgage lender or loan servicer to individuals who have paid $600 or more in mortgage interest during the calendar year. Lenders are legally required to send this form to borrowers by January 31st of the year following the tax year for which the interest was paid.

Form 1098 provides the official record of interest paid, important for claiming the mortgage interest deduction. Taxpayers typically receive this form via mail at their last known address or can access it electronically through their online mortgage account. If the form is not received by early February or if the information appears incorrect, contacting the mortgage lender directly is the appropriate step to obtain a copy or request a correction. The lender also sends a copy of Form 1098 to the IRS.

Details Included on the Statement

Form 1098 contains several boxes, each providing specific financial details related to the mortgage. Box 1, “Mortgage Interest Received by Lender,” shows the total amount of interest the borrower paid during the tax year. This figure is generally the most significant for calculating the mortgage interest deduction. Box 2, “Outstanding Mortgage Principal,” indicates the remaining balance on the loan as of January 1st of the reporting year.

Box 3, “Mortgage Origination Date,” specifies the date the mortgage was initially taken out. This date can be relevant for certain limitations on the mortgage interest deduction. If a refund of overpaid interest from a prior year was issued, it will be reported in Box 4, “Refund of Overpaid Interest.” This amount may need to be included as income if the original interest was deducted.

Box 5, “Mortgage Insurance Premiums,” reports amounts paid for qualified mortgage insurance premiums, which may be deductible for certain tax years. Box 6, “Points Paid on Purchase of Principal Residence,” shows points paid to obtain the mortgage, which may be deductible in the year paid or amortized over the loan’s term.

Applying Mortgage Interest on Your Tax Return

The information from Form 1098 is used when preparing a tax return, specifically if a taxpayer chooses to itemize deductions. Mortgage interest is typically reported on Schedule A (Form 1040), “Itemized Deductions.” The amount of mortgage interest from Box 1 of Form 1098 is usually entered on Line 8a of Schedule A.

If mortgage insurance premiums are deductible for the tax year, the amount from Box 5 of Form 1098 is reported on Line 8d of Schedule A. Points paid that are not already included in Box 1 and are deductible may be reported on Line 8b or 8c of Schedule A, depending on whether they were reported on Form 1098.

Limitations apply to the mortgage interest deduction. For mortgage debt incurred after December 15, 2017, the deduction is generally limited to the interest paid on the first $750,000 of qualified mortgage debt. For debt incurred before December 16, 2017, the limit is $1 million. These limits apply to the combined total of all qualified mortgages.