Mortgage Interest Tax Deductions May Get Extra Scrutiny This Year
A newly designed Form 1098 gives the IRS more information, so be prepared to defend your deduction.
In response to criticism that the IRS was not properly monitoring mortgage interest deductions, Congress was asked to require lenders to report more information about the loans. In 2015 Congress passed the new reporting rules, and they went into effect for tax year 2016. Homeowners will see the result this year in a newly designed Form 1098, which is used to report mortgage interest. The new form will include the mortgage origination date, the balance at the end of last year and the address of the property securing the loan, as well as other information useful to the IRS.
With this new wealth of information, it’s expected that the IRS could direct more attention and audit resources toward checking mortgage interest deductions.
Note: These simplified examples are intended for informational purposes only. There are exceptions, definitions, special circumstances, etc. that are not covered. This article is not a substitute for professional advice directed to your personal situation. Therefore, we urge you to contact us if you have specific questions.
Charlie Benway is president of Main Street Financial LLC, a fee-only financial planning firm. He is a CPAand Certified Financial Planner™ who advises clients on taxes and investments in a fiduciary capacity.
About the Author
Charles Benway, CPA, CFP
President, Main Street Financial LLC
Charlie Benway is president of Main Street Financial LLC, a fee-only investment advisory and financial planning firm in Mount Kisco, NY. Benway is a CPA and Certified Financial Planner™ who takes a goals-based approach to managing investments in a fiduciary capacity. He has been advising clients on tax and financial matters since 1988.