When paying taxes, you want to deduct as many expenses as possible to reduce your taxable income. One way to do that is by deducting mortgage-related interest.
For the latter, you can deduct mortgage interest on the first $375,000 to $500,000 if filing separately or double that if filing jointly. The amount depends on when you took on the mortgage debt. But if you pay more mortgage interest, you can significantly reduce the taxes you owe.
However, not everyone qualifies for the mortgage interest deduction. To enjoy it, you must have filed Form 1040 and itemized your deductions. In addition, you must have secured the mortgage on a qualified home that belongs to you.
So, if you choose to take advantage of the mortgage interest deductions, you should familiarize yourself with a mortgage interest tax form known as Form 1098. You will need it.
Read More: Deducting Mortgage Interest on a Second Home
What Is Mortgage Tax Form 1098?
Lenders use the IRS mortgage interest Form 1098 to report the interest they have received from individuals paying mortgages. However, it is only filed when the mortgage interest they receive exceeds $600. And it usually includes information about points or prepaid interest paid when you bought the property.
Read More: What Are Mortgage Points?
As a homeowner, you need to get a copy of the 1098 mortgage statement. Ideally, the lender should give you one since the IRS requires them to do so. That way, you can use the available information to determine your mortgage interest as you itemize your deductions when filing your tax return.
It is also worth noting that if you are paying a mortgage on more than one qualified property, you will need to obtain individual Form 1098s for all the properties you own and pay for.
How Do You Get Your 1098 Mortgage Interest Statement?
Are you wondering, “How do I get my 1098 mortgage interest statement?” Below are the things you may need to do to get that statement.
First, decide whether or not you meet the criteria. For starters, you could estimate your mortgage interest to determine whether you have paid at least $600. And that threshold applies to each property. If you have paid less than $600 in interest for one of your properties, you cannot get Form 1098 for it.
In addition, you must ensure that you don’t co-own any of the qualifying properties with any company type other than a sole proprietorship. Also, lenders who hold the mortgage personally and not in the course of their trade or business don’t have to provide the mortgage interest statement.
Secondly, find out if your mortgage is secured by real property. The IRS only requires lenders to issue Form 1098 for owners of real property, which consists of the land and anything built on or attached to it.
Check out your mail and determine whether your lender has sent you a copy or two of the IRS Form 1098. One may be for use when filing taxes and the other for your personal records. But all you need is one copy for reference.
If the form is unavailable in the mail, you may want to reach out to your mortgage lender and ask for instructions on how to get one. You could contact their customer representatives by phone. Calling would be an excellent option, especially if you lost the form sent to you by mail.
If you have a co-borrower and they are listed as the primary borrower, you may want to reach out to them and inquire whether they have received Form 1098. You can then get a copy and split the mortgage interest when itemizing your deductions if you are filing separately.
There is also the online access option if you don’t want to call. Many mortgage lenders enable borrowers to maintain online accounts on their websites. You could log in and search for the mortgage interest statement for the current year. For example, you can search for “1098 mortgage interest 2020 statement” for the stated year and print it for your use.
If a private party is holding your mortgage, you could ask them to provide you with a copy of Form 1098. They may not be aware that they have a legal obligation to provide it. So, informing them will enable you to get the information you need.
Read More: Mortgages & Taxes: What You Need to Know
Suppose you are completely unable to obtain the 1098 mortgage interest statement. In that case, you can estimate your mortgage interest by looking at your monthly account statements or logging into your lender’s online account. And then, you can use those numbers by claiming your mortgage interest deductions and reducing your taxable income.
I hold a BS in Computer Science and have been a freelance writer since 2011. When I am not writing, I enjoy reading, watching cooking and lifestyle shows, and fantasizing about world travels.