Every year, Quicken Loans is required to report Form 1098, the Mortgage Interest Statement, to the Internal Revenue Service (IRS) for your mortgage and provide this statement to you. This statement often assists homeowners in filing their own tax forms required by the IRS, particularly in helping to take advantage of home tax deductions.
Quicken Loans clients can access their 1098 statement online through the Rocket Mortgage servicing site . If you haven’t signed up for paperless statements yet, you’ll receive the form in the mail no later than the end of January.
With that said, Quicken Loans would like to note an important change relating to mortgage insurance premiums (MIP) for the 1098 statement for 2017. The deductibility of MIPs for certain homeowners has been recognized in prior years. During these years, mortgage lenders have been required to report this information on Form 1098. For 2017, however, this section has not been reauthorized by Congress. Accordingly, this means that Box 5, where such amounts are indicated on your 1098 for 2017, will be left blank. For your records, please find this amount noted on the Account Summary page, which is provided along with your 1098 statement each year.
Below please find more information on mortgage interest deductions as well as the important change for mortgage insurance premiums on Form 1098 for 2017.
There are property value limits to this, and you should consult a tax professional if you’re unsure. That being said, many homeowners may be able to deduct their mortgage interest for their qualified homes.
A primary or vacation home will generally fall under the definition of a qualified home .
Prepaid Mortgage Interest and Points
As part of the mortgage interest deduction, homeowners may be able to deduct prepaid mortgage interest and/or points associated with your mortgage transaction in some cases as well for a given year. Additionally, lending companies must report this information in certain cases on Form 1098.
It’s important to note that there are strict regulations around the year in which you claim the prepaid interest and/or points on your taxes. We advise talking to a tax preparation professional if you have questions.
Local Property Taxes
Another potentially deductible item is your local real estate taxes .
If you sold your home in the previous year, the federal government considers you to be the person who paid the property taxes up until the day you sell the property. You may be able to deduct the taxes on that property for the portion of the year you were living there. The IRS does have instructions on this, but if the math makes your head hurt, we strongly advise speaking with a tax professional.
What Does This Change Mean for You?
There’s still a lot you can deduct, but questions about the changes to your 1098 statement are understandable. We’ve gone ahead and put together a list of questions and answers below to help you navigate your 1098 this tax season. *
Why Can’t I Claim This on My Taxes?
Currently, Congress has not reauthorized the provision allowing mortgage insurance as a deduction for the 2017 tax year.
Quicken Loans must report certain information to the IRS, following its specific instructions for each tax year. We have an obligation to report this information in a timely and accurate fashion. For 2017, the deduction is no longer applicable.
Please see the IRS’ 1098 instructions for 2017 for more information.
I Paid for Mortgage Insurance. Why Didn’t You Include It in Box 5?
Quicken Loans was instructed to leave this box blank by the IRS. The amount you’ve paid in mortgage insurance for the year is listed on the Account Summary page that is included with your 1098.
For more information, please see the IRS’s 1098 instructions for 2017.
I Have Another Loan with a Different Lender, and It’s Included on That 1098 – Why Didn’t Quicken Loans Include It?
Quicken Loans has to report tax information to the IRS in its preferred format. Because the mortgage insurance deduction is not applicable for 2017, Box 5 has been left blank on your 2017 Form 1098.
Why did Quicken Loans decide I can no longer claim this on my taxes?
Quicken Loans doesn’t decide such matters. The U.S. government decides the applicability of such deductions.
The portion of your 1098 regarding mortgage insurance premiums as a deduction was effective for the 2016 tax year but has not been reauthorized by Congress for the 2017 tax year.
Each year, the IRS releases instructions for its tax forms regarding reporting requirements and other useful information. Because the mortgage interest deduction does not apply for the 2017 tax year, Box 5 covering mortgage insurance premiums has been left blank. Please see the IRS’s 1098 instructions for 2017 or visit IRS.gov for more information.
I Claimed It Last Year. Why Can’t I Claim It Now?
The portion regarding mortgage insurance premiums as a deduction was effective for the 2016 tax year and was thus required to be reported by Quicken Loans for certain homeowners. As the applicable section has not been reauthorized by Congress for the 2017 tax year, MIP is not being reported by Quicken Loans this year on Form 1098.
I Don’t Have a Tax Advisor. Who Can I Contact?
You may reach out to the IRS at (800) 829-1040 or your local IRS office. Additionally, your lawyer or any tax professional in your local area is likely able to assist you with such questions as well.
Why Does This Impact Me When My Mortgage Closed Prior to the Changes Being Made?
Each year, we see changes to laws and regulations in every area of our society. Taxes are no exception. Quicken Loans must follow the instructions provided by the IRS for each given year. For 2017, the IRS’s instructions are to complete Box 5 for MIP if the applicable section was reauthorized. However, no renewal has taken place at this time. For your records, you can see the premiums you paid for mortgage insurance for 2017 on the supplementary Account Summary page provided with your 1098.
If you would like more information, please refer to the IRS’s 1098 Instructions for 2017 or IRS.gov.
What number can I call to verify this information with the IRS?
You can call your local IRS office or (800) 829-1040.
Can I prepay my taxes?
Please see the following statement from Quicken Loans CEO Jay Farner:
“Quicken Loans has always paid property taxes by calendar year end (for clients whose loans we service and maintain tax escrow accounts) if the taxes are assessed and payable by December 31.
This policy allows our clients to benefit from any tax advantages that paying property taxes by calendar year end may accrue to them.
In the situation where a client’s property taxes are not yet assessed and/or billed, we would not ‘prepay’ property taxes since the amount due would be unknown. This is our policy regardless of the time of year.
If a Quicken Loans client elects to pay unassessed and unbilled future taxes, Quicken Loans will continue to collect monthly escrow deposits and make any unpaid property tax payments as they come due. If the client’s prepayment of their property taxes has caused there to be excess funds in their escrow account, the client will receive a refund of any surplus of funds after the annual escrow analysis is performed.
Quicken Loans strongly encourages its clients to consult with a tax professional before making any ‘timing’ decisions related to the payment of property taxes that could result in substantial differences of overall income taxes owed and/or the timing of such payments, especially in a year, such as 2017, when significant changes to the tax code have taken place.”
I’m a Quicken Loans client. What number can I call to get more information?
You can reach us at our 1098 hotline. That number is (877) 457-1158.
*Please note that none of this information shall be construed as tax advice. If you’re seeking tax assistance, please reach out to your tax professional or the IRS.
The post Changes in Store for Mortgage Insurance Premiums on Your 1098 for 2017 appeared first on ZING Blog by Quicken Loans .