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Question for a tax guru

February 4th, 2013 at 09:56 pm

I have a question for Monkey Mama or Dido or anyone else who really knows their way around a tax return.

On Schedule A (deductions), Line 10, you're supposed to report the interest you paid on your mortgage loan. Because I paid off my loan mid-year, I only paid $253 in interest in 2012. The bank issued me a combined 1098/1099 statement, but it did not report that I paid ANY interest on my mortgage. When I called the bank to find out why, she said they don't have to report anything under $600.

So my question is, do I still report I paid the $253 on Line 10, or should I report it on Line 11?

The instructions for Line 11 say that if you did not receive a Form 1098 from recipient, report your deductible mortgage interest on line 11. I DID receive the Form 1098, but as I explained, they didn't report the $253 in interest paid.

Instructions for Line 11 go on to say that if you bought your home from the recipient (does this mean if i paid off the mortgage?), be sure to show on line 11 the recipient's name and employer ID #; if i don't, i could be subject to a $50 penalty.

I guess I could try calling IRS tomorrow, but would rather avoid that particular pain if I can...

4 Responses to “Question for a tax guru”

  1. MonkeyMama Says:

    Just put it on line 11. This is the line you would use because the interest you are claiming will not match any 1098. You would only put down more info if you took a mortgage from the person you bought the home from - so that is totally N/A for you.

  2. Says:

    Just to be sure, should I put the bank name and tax ID number on Line 11? Otherwise, IRS may think I bought the house from an individual.

  3. Says:

    Delving into the fine details on Pub 926, I came across this. the 1st paragraph seems to be at odds with the 2nd paragraph?

    1st paragraph says if you paid more interest than is shown on the 1098, (which I did), then report it on Line 10 and explain the difference.

    Paragraph 2 says to deduct mortgage interest paid that was not reported on 1098 (which it wasn't) on Line 11.

    How To Report
    Deduct the home mortgage interest and points reported to you on Form 1098 on Schedule A (Form 1040), line 10. If you paid more deductible interest to the financial institution than the amount shown on Form 1098, show the larger deductible amount on line 10. Attach a statement explaining the difference and print “See attached” next to line 10.
    Deduct home mortgage interest that was not reported to you on Form 1098 on Schedule A (Form 1040), line 11. If you paid home mortgage interest to the person from whom you bought your home, show that person's name, address, and taxpayer identification number (TIN) on the dotted lines next to line 11. The seller must give you this number and you must give the seller your TIN. A Form W-9, Request for Taxpayer Identification Number and Certification, can be used for this purpose. Failure to meet any of these requirements may result in a $50 penalty for each failure. The TIN can be either a social security number, an individual tax-payer identification number (issued by the Internal Revenue Service), or an employer identification number.

  4. MonkeyMama Says:

    Putting it on #10 with a note is fine. IT is probably the easiest, as I am sure the IRS may send you a note asking questions regardless. That said, it is no gurantee that they will actually read your note, and you might get a notice anyway. But, just a heads up. Not to freak out about it - if you get a notice about it, just explain it was under $600. It's really that simple.

    From a professional standpoint, everything that doesn't match just goes on line 11. It's our way of saying "we know this does not match the lender 1098, and we know you aren't going to read our explanation of why it does not match."

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