A Guide to the 1098 Form and Your Taxes

Form 1098

The 1098 form and its variants are used to report certain contributions and other possible tax-deductible expenses to the IRS and taxpayers. In particular, they cover mortgage interest payments; contributions of motor vehicles, boats, or airplanes; student loan interest paid; and tuition and scholarship information.

The IRS requires most of these forms (excluding 1098-C) to be completed and sent to taxpayers by January 31 of each year so that taxpayers can use the information to complete their tax returns.

What is Form 1098?

Form 1098 Mortgage Interest Statement is used by lenders to report the amounts paid by a borrower if it is $600 or more in interest, mortgage insurance premiums, or points during the tax year. Lenders must file a separate Form 1098 for each mortgage that they hold.

If a mortgage does not meet the $600 interest threshold, the form does not have to be filed. Even so, lenders may file one anyway. The information on this form may be used for certain tax deductions related to interest, mortgage insurance premiums, or points paid.

This form reports:

• The lender's name, address, phone number, and taxpayer identification number
• The taxpayer's name, address, and taxpayer identification number
• The amount of mortgage interest received
• Any outstanding mortgage principal
• The mortgage origination date
• Any refund of overpaid interest
• Mortgage insurance premiums paid
• Points paid on the purchase of a principal residence
• The address or a description of the property
• The number of properties securing the mortgage
• The date the mortgage was acquired by the lender during the current year

When might a mortgage lender not be obligated to provide Form 1098?

Lenders do not have to provide a Form 1098 if they received less than $600 in interest, mortgage insurance premiums, or points during the year. Additionally, interest received from a corporation, partnership, trust, estate, association, or company (other than a sole proprietor) does not require filing a Form 1098. If you bought a property with owner financing, the seller might not file a Form 1098. Regardless of why you may not have received a Form 1098, you typically can still deduct qualifying mortgage interest.

What is Form 1098-C?

Form 1098-C Contributions of Motor Vehicles, Boats, and Airplanes is filed by charities and provides information for certain donations that the charity receives. It shares information regarding a qualifying vehicle that you donated that may be tax-deductible. This deduction usually falls under itemized deductions, which you cannot claim if you take the standard deduction.

You must include this form with your tax return if you claim more than $500 as a deduction for the donation. Generally, the charity must provide this form within 30 days from the date of the sale of the vehicle if box 4a is checked or 30 days from the date of the contribution if box 5a or 5b is checked.

When filing your tax return, you use the information from this form to claim a deduction for your donation. Information reported on the form includes:

• The donee's name, address, telephone number, and taxpayer identification number
• The donor's name, address, and taxpayer identification number
• The date of contribution
• Vehicle-related information
• Sale- or donation-related information
• A description and value of any goods and services provided in exchange for the vehicle

What is Form 1098-E?

Form 1098-E Student Loan Interest Statement reports student loan interest received from you by a lender throughout the year. Lenders are required to fill out this form if you paid them $600 or more in interest over the year. This interest may be deductible as an adjustment when calculating your Adjusted Gross Income (AGI).

The amount that is tax-deductible depends on your filing status and modified adjusted gross income (MAGI). You would use the information on this form when filing your tax return to determine the deduction amount you may qualify for.

The form reports:

• The lender's name, address, phone number, and taxpayer identification number
• The borrower's name, address, account number, and taxpayer identification number
• The amount of student loan interest received by the lender

Have there been changes to student loan interest deduction in 2022?

Student loan interest taxation has changed from tax year 2021 to tax year 2022 by increasing the income phase out range for married couples filing joint returns.  The adjusted gross income phase out range for single filers is $70,000 to $85,000 while the range for joint returns is $145,000 to $175,000.

What is Form 1098-T?

Form 1098-T Tuition Statement reports payments received for qualified tuition and related expenses, certain adjustments, and scholarship or grant amounts for the prior year. This information may be used on your tax return to claim related education deductions and credits, such as the American Opportunity Tax Credit or Lifetime Learning Credit. Scholarships or grants may reduce the amount that qualifies for the credits.

In particular, this form reports:

• The filer's name, address, phone number, and employer identification number
• The student's name, address, and taxpayer identification number
• Payments received for qualifying tuition and related expenses, as well as any adjustments
• Scholarships or grants, as well as adjustments to scholarships or grants
• Any amount of insurance contract reimbursement or refund
• Student status

What qualifies as related expenses for a Form 1098-T?

In addition to qualified tuition, the IRS defines related expenses for this form as fees and course materials required to be enrolled at or attend an eligible educational institution.

This doesn't include courses for sports, games, or hobbies, unless that course is part of a degree program or taken to acquire or improve job skills. It also does not include costs for room, board, insurance, medical expenses, transportation, and other living expenses.

Have there been tax-related changes to tuition payments in 2022?

Income limits for the the Lifetime Learning Credit increased in 2021 to be aligned with the American Opportunity Credit. There have not been any additional changes to these credits for 2022.

For 2022 the credits begin to phase out for:

Once you receive any necessary 1098 forms, you can input them into TurboTax. Then, TurboTax will use the information to help you complete your tax return, including any deductions or tax credits you may qualify for.

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