Guide To 1098 Mortgage Interest Statements | Rocket Mortgage
Kevin Graham5-minute read
February 27, 2023
Originally written: December 3, 2020
Last updated: January 10, 2023
Every year, Rocket Mortgage® 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 assists homeowners in filing their own tax forms required by the IRS, particularly in helping to take advantage of home tax deductions.
Rocket Mortgage clients should get their paperless 1098 statements on the first business day of 2022 through their Rocket Mortgage Servicing Account. This is the quickest and most convenient way of getting your statement for your tax return.
We understand some of our clients still prefer a hard copy. If you’re getting paper 1098 statements, they’ll be sent by the end of January.
There are property value limits to the mortgage interest deduction, and if you’re unsure of how this information applies to your tax filing, you should consult a tax professional. That 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.
If you refinanced your mortgage during the year or bought a new home and sold an existing one, be sure to get mortgage interest statements for all applicable mortgages to accurately report the amount of interest paid and make sure that you’re maximizing your deduction.
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.
In order to make sure you have the most accurate information regarding the number of points paid on your mortgage, it’ll be important to keep your closing documents and refer to them when filing your taxes.
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.
Mortgage insurance premiums are included in Box 5 of your 1098. In addition to mortgage insurance, this would also include the VA funding fee and USDA guarantee fees. Although these premiums have been treated as deductible interest in the past, you can't deduct mortgage insurance premiums as of the 2022 tax year.
Local Property Taxes
Another potentially deductible item is your property taxes, also known as local real estate taxes. You should also be able to find this information on the section of your 1098 marked as informational only. You can also contact your local tax authority.
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.
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Frequently Asked Questions About 1098 Mortgage Interest Statements
Now that we’ve gone over the basics regarding your mortgage interest statement, we’d like to wind this up by answering a few of our clients’ most common questions.
Why Did I Receive A Corrected 1098 Statement?
If we later determine any information on your 1098 is inaccurate due to an error or updated guidance from the IRS, we’ll issue a corrected statement. It’s worth noting that if the mistake is only on page 2 (the bottom half of your 1098), a correction won’t be sent. This is a consumer copy and not reported to the IRS.
For more information on what this means for your taxes, we recommend consulting the IRS or a tax professional.
I Pay The Mortgage Interest. Can I Claim The Deduction Even Though I’m Not Listed On The Mortgage?
You can take the deduction as long as another person, on the mortgage or otherwise, isn’t making a claim to the same deduction. If you have any questions about the best thing to do in your situation, we recommend speaking with a tax advisor.
I Paid More Toward Interest In Another Month Than The Statement Is Showing. Why Is That?
Each tax year, you can only deduct mortgage interest for 13 months’ worth of payments, including January of the following year. The reasoning for this is that mortgage interest is paid sometime after the actual interest charge. January is included because the interest was accrued in December of the previous year.
I Have A VA Loan And Don’t Pay Mortgage Insurance. What’s The Number Included In Box 5?
In the eyes of the IRS, this funding fee serves as a mortgage insurance payment.
Box 5 will include the charges for either your full VA funding fee amount if you paid up front or the amount that you paid in the past year if you build it into your balance.
Can I Prepay My Taxes?
Please see the following statement from Rocket Mortgage® CEO Jay Farner:
“Rocket Mortgage 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 gain 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 Rocket Mortgage client elects to pay unassessed and unbilled future taxes, Rocket Mortgage 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 an escrow analysis is performed.
“Rocket Mortgage 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 Rocket Mortgage Client. What Number Can I Call To Get More Information?
You can reach us at our 1098 hotline. That number is (877) 457-1158.
What Number Can I Call To Verify This Information With The IRS?
Individuals can call their local IRS office or (800) 829-1040.
I Don’t Have A Tax Advisor – Who Can I Contact?
Individuals can reach out to the IRS at (800) 829-1040, IRS.gov, 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.
Please note that none of this information should be construed as tax advice. If you’re seeking tax assistance, please reach out to your tax professional or the IRS.
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