The latest version of Form 1098 is available from the IRS for tax season 2022. Get to Know Form 1098 There are seven different types of 1098 forms, but the one we wanted to talk about today is the original, the plain 1098. Form 1098 is used to help report mortgage interest. The last year or so has seen a tumultuous housing market, with home prices rising to astronomical prices due to drastic upticks in demand and inflation. Mortgage interest deductions, like those categorized and reported on form 1098, are not all-encompassing. The IRS defines mortgage interest as interest that is accrued from a loan that originates on your primary or secondary home. A mortgage interest that qualifies for deduction includes: Any interest on your home, which is defined as a property that includes sleeping, cooking, and eating facilities: house, condo, co-op, mobile home, boat, or recreational vehicle Interest on a second home that is not being rented out (there are specific guidelines for those who rent their homes seasonally and in other piecemeal situations Most mortgage insurance premiums Late payment fees Prepayment penalties Points Home equity loans and home equity lines of credit: if you took out a home equity loan to finance a remodel (a common occurrence with the rise of COVID and the work-from-home boom), you can deduct interest on the amount you used for the renovation Unfortunately, there are several things that are not deductible when you file a 1098, including mortgage interest on a third or fourth home, reverse mortgage interest, homeowners’ insurances, appraisal and notary fees, down payments, closing costs, home equity loans, and equity loan funds that were not used on the property. If you worked from home last year, you’ll have to get measurements and do some calculations because you can claim the space in your house that was used for living, but not the space you used for work (this is the opposite of a home office …
5 Common 1098 Questions
1098s are another subset of forms, much like 1099s, that have small but crucial differences between the different form types. As we approach the end of 2020, tax season will seem closer than ever after the strange circumstances this year brought around for businesses and tax filing. Here are some answers to 5 common 1098 form and filing questions. What is the deadline for filing 1098s? Copy A of the 1098 deadline for filing on paper with the IRS is February 28. If you are filing electronically, the due date is the end of March. Copy B must be provided to the borrower by the end of January. What happens if there are errors on my 1098? The most common errors associated with 1098 filing are: filing the wrong form type, reporting the wrong amount, reporting the wrong TIN or not including one at all, using the wrong year/version of the form, and not using the correct IRS form (you cannot download or copy). If you make an error that you are unable to fix, the best thing to do is contact an accountant or tax professional for help. Once you have the updated information, you need to file a correction for each form that had errors. What are the different types of 1098s and what are they used for? The primary function of 1098 forms is to report payments and contributions you made that have the potential to be deducted from your taxable income. There are seven different 1098 forms: 1098 (mortgage interest statement), 1098-C (contributions of motor vehicles, boats, and airplanes), 1098-E (student loan interest statement), 1098-F (fines, penalties, and other amounts), 1098-MA (mortgage assistance payments), 1098-Q (qualifying longevity annuity contract information), and 1098-T (tuition statement). For a bit more on these forms and what they are used for, take a look at our other blog post. What’s the most common 1098 form? The most common 1098 form is, incidentally, the 1098 itself without any dashes or letters following it. This form is used to report …
Types of 1098s and When to Use Them
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. 1098 This form is a Mortgage Interest Statement. Your mortgage company will send you this form if you paid at least $600 in mortgage interest. 1098-C 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. 1098-E 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. 1098-F 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. 1098-MA 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. 1098-Q 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. 1098-T 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 …
Continue Reading about Types of 1098s and When to Use Them →
Do You Need a Filing Extension?
Do you want more time to prepare your federal tax return? Then apply for a filing extension. What is a Filing Extension? Requesting a filing extension means that you are asking the IRS for additional time to file federal tax forms, giving you more time to collect the necessary details to complete them. But, if you owe money to the IRS, the payment deadline will not change, even if you are granted the extension. Also, you will still need to furnish statements to recipients by the deadlines. You can apply for an extension of time to file the following forms: W-2 W-2G 1042-S 1094-C 1095 1097 1098 1099 3921 3922 5498 8027 What are the Requirements for Filing an Extension? To receive an extension, you must need additional time to file your returns accurately. According to the IRS, if you are requesting an extension for Forms W-2 or 1099-MISC reporting NEC only (now 1099-NEC), you must meet one of the following criteria: The filer suffered a catastrophic event in a federally declared disaster area that made the filer unable to resume operations or made necessary records unavailable Death, serious illness, or unavoidable absence of the individual responsible for filing the information returns affected the operation of the filer Fire, casualty, or natural disaster affected the operation of the filer The filer was in the first year of establishment The filer did not receive data on a payee statement such as Schedule K-1, Form 1042-S, or the statement of sick pay required under section 31.6051-3(a)(1) in time to prepare an accurate information return How Can I Request an Extension? To request an extension, you must file Form 8809, Application for Extension of Time To File Information Returns. Currently, to apply for a filing extension for Forms W-2 and 1099, you can only submit the paper form to: Department of the Treasury, Internal Revenue Service Center, Ogden, UT 84201-0209. Learn more from the IRS at this link. When you …