How do I file my two 1098 Mortgage Interest Statements?

bigsnackbelly
bigsnackbelly Member Posts: 1 Newcomer
edited March 13 in Filing my taxes

I purchased my primary home in 2024 and have one mortgage, but received two 1098 Mortgage Interest Statements. One from the Lender and Servicer. The Lender's 1098 seems to be for the Prepaid Interest and Points paid during closing, while the servicer's 1098 is my "regular" one.

If I put in both 1098s, the system seems to think I have two mortgages as it averages my mortgage balance to 2x my ending balance for the year as Box2 shows my original balance on both 1098s

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Answers

  • MatthewD
    MatthewD FreeTaxUSA Team Posts: 581

    Hi bigsnackbelly,

    There is a way to enter your mortgage balances in this situation. What I think has happened is your lender has sold the loan to the Servicer. Is that right? Or perhaps, the Lender only handled the loan for a short time and then turned over the remaining balance for the Servicer to handle?

    What we need to do is find the Average Balance in 2024 so the software can calculate any limits for the $750,000 limit rule to limit interest (if needed). Let me explain how that is done.

    After you enter the 1098s in the mortgage 1098 section, continue to the "Tell us more about each loan shown below" page. This page will list both the 1098s and ask you to enter the "Loan balance as of January 1, 2025:" Since you only paid the Lender for a short time and they no longer service it, the balance of that loan, "Loan balance as of January 1, 2025:" would be $0 (to find the average balance) and then for the Servicer, you enter the Box 2 amount from your 1098.

    Then on the "Confirm your average mortgage balance" an amount may be suggested in the last box for dates after 2017, but again only enter the amount from Box 2 from the Servicer 1098.

    This way you will accurately enter your 1098s and your loan interest will be limited or not correctly.

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