taxes

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.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
How to Calculate the Break-Even Age for Taking Social Security
social security

How to Calculate the Break-Even Age for Taking Social Security

When it comes to maximizing your Social Security benefits, there are many elements to consider. One factor that can be especially enlightening is your…
August 30, 2021
Spend Without Worry in Retirement
Financial Planning

Spend Without Worry in Retirement

Fears of running out of money prevent many retirees from tapping the nest egg they’ve worked a lifetime to save. With these strategies, you can genera…
August 30, 2021

Recommended

Child Tax Credit Payment Schedule for the Rest of 2021
Tax Breaks

Child Tax Credit Payment Schedule for the Rest of 2021

The IRS has already sent three batches of monthly child tax credit payments. Here's when you can expect the rest of your payments.
September 16, 2021
What Are the Income Tax Brackets for 2021 vs. 2020?
tax brackets

What Are the Income Tax Brackets for 2021 vs. 2020?

There are seven different federal income tax brackets for your 2021 tax return – each with its own marginal tax rate. Which bracket you end up in for …
September 14, 2021
When Are 2021 Estimated Tax Payments Due?
tax deadline

When Are 2021 Estimated Tax Payments Due?

If you're self-employed or don't have taxes withheld from other sources of taxable income, it's up to you to periodically pay the IRS by making estima…
September 14, 2021
The RMD Solution to the Hassle of Filing Estimated Taxes in Retirement
required minimum distributions (RMDs)

The RMD Solution to the Hassle of Filing Estimated Taxes in Retirement

If you don't need the money to live on, wait until December to take your RMD and ask the sponsor to withhold a big chunk for the IRS.
September 14, 2021