Thanks for asking your question! I'm sorry to hear about your tax
issue and I'm going to try my best to help you understand or resolve it.
Thank you for your question, and thank you for using JustAnswer.com. If you did not receive mortgage interest from this individual as a result of your trade or business, then you do not have to file a 1098 form. Based on your question, I do not believe it is necessary for you to file the 1098 form.
For example, banks must file 1098 forms because they are in the business of making money. A real estate developer who sells a house would have to file a 1098 if he loaned money to a buyer in the normal course of his business -which is building houses.
However, if you are a school teacher, and sold your house on a land contract you do not have to file a 1098 form because you did not receive the income as a result of your work as a school teacher. Lending money is not part of your trade or business.
So, you don't need to give her a 1098 form unless you lent money out in the course of your trade or business. You can read more about this, HERE
Please let me know if you need anything additional. Thanks again for using JustAnswer.com and have a great day.
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You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.