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Stephen G.
Stephen G., Sr Income Tax Expert
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Experience:  Extensive Experience with Tax, Financial & Estate Issues
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How do I file Forms 1098 and 1098-MA?

Customer Question

How do I file Forms 1098 and 1098-MA on TurboxTax?

On my 1098 form from the lender 
line 1. Mortgage Interest Received from payer(s)/borrower(s) $8,793.38
line 2. Blank
line 3. Blank
line 4. Mortgage Insurance Premiums $784.29
Real Estate Taxes Paid $1093.40

On my 1098-MA
line 1. $12319.10
line 2. $11489.10
line 3. $830

Submitted: 3 years ago.
Category: Tax
Expert:  Stephen G. replied 3 years ago.

Expert: Stephen G. replied 3 years ago.

Hi and thanks for using our service. I'll do my best to give you a complete and accurate answer. Please ask me to clarify anything that is not clear.

The 1098-MA is the Mortgage Assistance Form which basically isn’t used for income tax reporting, but is used for various other assistance programs. Do you know how much of your mortgage payments, interest, etc. were paid by this program? You will need to figure that percentage times the 1098 amounts to determine the balance actually paid by you in order to get the proper income tax deduction.

Customer:

On my 1098-MA line 1 – which shows the total amount of State HFA/HUD mortgage assistance payments and homeowner mortgage payments - $12,319.10. On Line 2 - $11,489.10. Line 3 - $830.

Box 2 shows the amount of State HFA/HUD mortgage assistance payments and Box 3 shows the amount of the homeowner mortgage payments I paid to the State FHA and HUD. Basically, $11489.10 was paid by the program and $830 was paid by me for a total of $12,319.10.

So, when I file my taxes on TurboTax and come to the section for 1098 Mortgage deduction I usually would just enter the amounts exactly how they appear on the Form 1098. Now, I have this 1098-MA (Mortgage Assistance Program) Form and I’m trying to figure out if I should disregard the 1098 information from the lender.

Stephen G:

If you see the instructions to the Homeowner on the 1098-MA, you will see that there's a safe harbor provision that allows you to deduct all of the payments YOU made; you can't deduct the subsidized payments. So, the question is, is the $830 all you paid or did you also pay the real estate taxes and the mortgage insurance premiums? The idea is that you don’t have to pay taxes on the subsidized payments, but you can’t take a tax deduction for something you didn’t pay yourself.

Customer:

My real estate taxes and mortgage ins premiums are all escrowed into my mortgage payments. So the Form 1098-MA is showing that I only paid $830 to the State HFA or HUD. They paid at 90-95% of the mortgage payments.

Stephen G:

Right, so the safe harbor says you can deduct 100% of what you paid, so if I were you I'd deduct the $830. as mortgage interest on your primary residence. Will you still have enough to itemize, or will the standard deduction be higher now? TurboTax should compute that automatically.

Customer:

So, when I go online to fill out my taxes on TurboTax for mortgage interest I should put $830. Insurance premiums leave $0 and property taxes $0. even though the mortgage interest amount listed on my 1098 from the lender is $8,793.38?

Stephen G:

The lender got his money, it's just that you didn't pay it. That's correct, the 830. goes in interest. Don't forget the IRS also has a copy of the 1098-MA, so they know how much you actually paid.

Customer:

Thank you very much for your help!

Customer:

Hi. My name is ***** ***** I will be happy to help you.

1098-MA is for informational purposes only and is not deduct on your return unless amount in box 3 (1098MA) is more than box 1 on 1098, which is not in your case.

Mortgage interest, PMI and property taxes are deducted on schedule A as part of itemized deduction. Go to federal taxes/deductions and credits/I'll choose what I work on/Your home and click start and follow the steps.

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