There are close to 1,000 forms related to federal income taxes, and seven different types of 1098 forms.
There are seven different types of 1098 forms, each with a different purpose and importance. Let’s run through each form and what they’re used for.
This form is a Mortgage Interest Statement. Your mortgage company will send you this form if you paid at least $600 in mortgage interest.
This form is for Contributions of Motor Vehicles, Boats, and Airplanes. If you donated a car, boat, or airplane worth more than $500 to a charity, you can take a charitable deduction for your contribution using this form.
This form is a Student Loan Interest Statement. Your lenders must give you this form if you paid at least $600 in qualified loan interest.
This form is for Fines, Penalties, and Other Amounts. If you paid any of the following, you’ll need to include them on this 1098 form: court-ordered fines, penalties, restitution, or remediation. However, these payments are not typically tax-deductible.
This form is for Mortgage Assistance Payments. You’ll use this form when you received or paid any homeowner assistance payments through a state Housing Finance Agency. If you meet certain requirements, you could potentially deduct those payments.
This form is for Qualifying Longevity Annuity Contract Information. This contract is from a certain type of retirement account, and the 1098-Q is where you’d report these payouts.
This form is a tuition statement. The recipient may claim education credits if he or she paid tuition to an eligible higher education institution, like a college or university.
1098 forms are given to anyone who has been engaged in any of the abovementioned financial transactions during the tax year. When you receive these forms, it’s always a good practice to make sure all information reported – even VINs, social security numbers, etc, – is correct before you file your taxes.
Understanding the parameters within each form 1098 can help you figure out whether you are eligible for these different tax break opportunities.
When you’re ready to file your 1098s, sign up for a free account with eFile360.