The recent fiscal cliff tax deal extends the ability to treat mortgage insurance premiums as qualified residential interest, and the Internal Revenue Service is providing guidance on how to report the premiums on Form 1098, both electronically and on paper.
As part of the American Taxpayer Relief Act, a provision allowing mortgage insurance premiums to be treated as qualified residence interest, which had expired on Dec. 31, 2011, has been extended until Dec. 31, 2013.
The IRS issued guidance earlier this month in Revenue Procedure 2013-10 on how to report this electronically this year, but neglected to describe how paper filers should report their premiums. The provision affects all financial institutions that hold mortgages, whether they are banks or standalone mortgage lenders.
Convey Compliance Systems, a tax information reporting software company, contacted the IRS and received an update on how to report on paper, which the IRS has not yet publicly announced. The information is to be reported on the current 2012 Form 1098, "Mortgage Interest Statement," in the blank box 4 (which is designated for use in providing “other information”). The filer should indicate in some way that the amount inserted in that box is reporting mortgage insurance premiums paid. This is the same box where mortgage insurance premiums were reported on the 2011 Form 1098. Convey expects official guidance to be released by the IRS in the very near future and is updating all of its products to accommodate this change.
“Last year the IRS made more than 70 changes to state and federal tax information reporting filing requirements, many of which were announced at the last minute while tax professionals were in the midst of preparing their tax information returns,” said Convey Compliance executive vice president Troy Thibodeau. “This latest unannounced change for 2012 filing suggests that this year will be no different. Tax professionals face more tax information reporting responsibilities than ever before. For those filing tax information returns unaided, this responsibility is compounded by a need to be ever more vigilant for last-minute changes or risk submitting information incorrectly.”
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access