Update as of February 23, 2018: Congress decided to reinstate the tax provision on deductibility of mortgage insurance premiums retroactively for 2017 as part of the Bipartisan Budget Act of 2018, which was signed into law on February 9, 2018. As a result, we’re issuing corrected 1098 statements with the amount allocated to mortgage insurance premiums for 2017 in Box 5 if applicable. For more information on the tax implications of this, we recommend speaking with your tax professional.
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 assists homeowners in filing their own tax forms required by the IRS, particularly in helping to take advantage of home tax deductions.
Quicken Loans was obligated to provide our clients with their statement by January 31, 2018. Following the form’s 2017 instructions, Quicken Loans left Box 5 for mortgage insurance premiums blank at this time. However, on February 9, 2018, the Bipartisan Budget Act of 2018 was signed into law, retroactively extending a number of tax provisions for the 2017 tax year. Among these changes was reauthorizing the treatment of mortgage insurance premiums as qualified residence interest for the 2017 tax year.
As a result of these changes, Quicken Loans is issuing corrected 1098 statements to clients who paid mortgage insurance premiums in 2017 in Box 5. You can access them online now, and if you haven’t signed up for paperless statements, they’ll be coming in the mail shortly.
Below, you’ll find more information on mortgage interest deductions as well as the info on corrections being issued to the 1098 statements for clients who paid for mortgage insurance in 2017.
There are property value limits to the mortgage interest deduction, and you should consult a tax professional how this information applies to your tax filing if you’re unsure. 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.
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 a lot you can potentially deduct, but questions about the correction on your 1098 statement for clients who paid mortgage insurance 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 Are You Issuing Corrected 1098 Statements?
Since mortgage insurance payments weren’t deductible for 2017 at the time 1098 statements were issued, Quicken Loans followed the form’s instructions and left Box 5 for mortgage insurance premiums blank.
Now that mortgage insurance deductions have been retroactively applied to 2017 returns as part of the Bipartisan Budget Act of 2018, we’re resending the 1098 statements with mortgage insurance premiums included to impacted clients.
For more information on what this means for your taxes, we recommend consulting the IRS or a tax professional.
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.
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 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 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 an 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.
What Number Can I Call to Verify This Information with the IRS?
Individuals can call their local IRS office or (800) 829-1040.
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.
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