What is Form 1098?
mortgage interest on this form is important, because in most cases it lowers the 's tax liability. If the borrower has more than one mortgage lender, he or she receive more than one 1098. If the interest paid is less than $600, however, the borrower might not receive a 1098 from the lender (though the borrower can still report the interest paid).
Receipts of interest from corporations, partnerships, trust, estates, associations, or companies do not require 1098s, according to the .
It is important to that people who are not engaged in the lending business generally do not have to file 1098s. For example, if you are a veterinarian and you lend $10,000 to a friend, who makes interest payments to you, you do not have to file a 1098 on the borrower (you do have to report the interest , however). The IRS also sets rules for non-U.S. citizens or non-U.S. residents who receive interest in the United States.
How Does Form 1098 Work?
Let's say John Doe borrows $100,000 for a house from Bank XYZ. He makes the mortgage interest. For John, this mortgage interest is tax-deductible, so he uses the $11,000 number on his tax return for the year. If John paid points on the mortgage (to lower the interest rate) or prepaid any interest, those points and interest payments appear on Form 1098 as well.
There are other kinds of 1098 forms. 1098-C forms, for example, provide information about the donation of boats, cars and other vehicles. Form 1098-E shows the interest paid on student for the year, and Form1098-T shows the amount of tuition paid for the year.
Why Does Form 1098 Matter?
A Form 1098 is anform that reports how much interest a paid during the .