What Is a 1098? A Complete Guide
Did you know there are 4 tax schedules? In addition to that, there are over 800 IRS forms!
It can be daunting facing them, especially when they all contain legal jargon that can be tough to slog through. There’s a whole bunch of numbered forms to deal with, such as the 1040, 990, 5500, 1120, 1095, 1098, etc. Wen can help, but let’s take it one form at a time.
In this article, we’ll tackle the 1098 and answer the burning questions you have, such as what is a 1098? Do you need to file one? If so, how can you do so?
Read on to find out!
What Is a 1098?
Let’s answer the most important question first: what is a 1098 statement? The 1098 form is also known as the mortgage interest statement.
This form is used by 2 parties. First, it’s used by lenders who need to report how much money they’ve received in interest payments.
Second, homeowners use it to figure out how much interest they’ve paid on their mortgage in a year. this can help them determine the right amount to put down as a deduction on their annual tax returns.
As a result, the IRS uses this form to confirm that everything is in order and reported correctly.
Who Needs to File a 1098?
You might think that as the homeowner, you’ll need to file the 1098. However, it’s the lender’s responsibility! So unless you’re a lender, you won’t have to worry about this addition form come tax time.
If you’ve paid over $600 in interest for your mortgage payments in the previous year, lenders are required by law to send you a 1098.
Do note that your property has to be considered “real property” for this to happen. This can either be land itself, or any property you’ve built on, grown on, or attached to it.
Your mortgage also has to be qualified.
How to File a 1098
Because the lender is responsible for filing a 1098, you as the homeowner don’t have to handle this. However, you’ll definitely need the 1098 form to deduct your mortgage payments from your annual tax return. So make sure your lender sends you this important piece of paper.
If you’re a lender, the IRS has all of their forms available online through their website, so you just have to Google “form 1098” and you should spot the form on the top results.
You can also file a 1098 online. This is much quicker and more convenient since you don’t have to deal with snail mail.
Make Sure You Do Your Taxes Right
So what is a 1098? It’s a mortgage interest statement that’s issued to any homeowner that’s paid over $600 in interest in one year.
If you’re a homeowner, all you have to worry about is getting the statement from your lender. Otherwise, if you’re a lender yourself, you can easily file with a 1098 e-form!
For more information on taxes, make sure you check out the rest of our blog page!