When dealing with property or interest payments you or your organization will need a 1098 tax form to document the money, people, and organizations involved in the sales and transactions.
Not to be confused with the 1099 form, the 1098 tax form is a tax document that the IRS requires for transactions and sales involving property. This could include property like homes, mortgages, or even motor vehicles. The kind of 1098 form you’ll need to use depends on what kind of property you’re dealing with. It could also potentially depend on what kind of organization you represent. Meanwhile, other 1098 forms, like the 1098 T form, have to do with students and their student loans.
All the many tax forms and their different variations can be confusing. Luckily there are tax services you can take advantage of to make filing taxes a breeze.
The 1098 form can also be referred to as the Mortgage Interest Statement. There is more than one version of the 1098 tax form and each one is used for different purposes. People will use the 1098 form to outline mortgage interest they’ve received in the past year. This will then report those interest earnings they’ve received to the IRS when filing tax returns.
The 1098 form has 2 common purposes. The first purpose that it is most commonly used for is to report interest payments. Lenders will use this tax form to report any interest payments that are higher than $600 for that year. The IRS needs these reports from lenders to make sure financial institutions that receive interest are reporting their interest payments properly.
The other common purpose for this form is for homeowners. A homeowner will use this form to report mortgage interest they’ve paid over the past calendar year. These payments toward mortgage interest may qualify you for a tax deduction, another reason using this tax form as a homeowner is a good idea.
As a taxpayer rather than a lending company, you would most likely use this form as a mortgage interest statement if you own a home and are currently paying off a mortgage. Look out for a 1098 form from your mortgage lender if you’ve paid more than $600 in mortgage interest in the past year. Your mortgage lender will be required to send you one of these forms if you’ve paid more than $600 in interest to them over the year. Then these listed expenses can be used on your income tax return as deductions.
Some of the information that will need to be filled out in a 1098 form includes:
The 1098 T form can also be referred to as the Tuition Statement. If you are an enrolled student then you’ll probably receive a 1098 T form from your school. This document is given by the school to every enrolled student that pays tuition or similar transactions. The 1098 T form then outlines items like the student’s contact information and the payments that the student has made to the school. Scholarship and grant money may also appear on your 1098T form.
Most likely, the 1098-T form will be issued by an educational institution. This could include colleges, universities, vocational schools, or any other educational institutions that offer post-secondary education. The 1098-T form is first given out by the Department of Education and their student aid program. But then this form is given out to qualifying schools who then pass out these forms to the students who need a 1098-T form.
The secondary education institution that you attend will send you a copy of your 1098-T form before the end of January each year. This form will then outline the tuition expenses you paid the previous year so that you can use this form to file your tax return during tax season each year.
This form works similarly to how a W2 from your place of employment works. At the beginning of each year your work is required to send each employee a W2 form so they can use that form when filing tax returns. If you were in school the past tax year, then you’ll also get the 1098-T form at the beginning of the year so you can use that form when filing tax returns as well. While your W2 outlines your income and taxes paid on that income from your job, the 1098-T form outlines the expenses paid from your schooling costs, like tuition.
Some of the information that will need to be filled out in a 1098 T form includes:
The 1098 E form can also be referred to as the Student Loan Interest Statement. The 1098 E form helps outline and report any interest a student has paid on any student loans. This document will outline contact information for both the student or borrower and the lender or receiver. Then it will show any and all student loan interest that the lender received from the borrower that year.
The 1098 tax form has a few different variations that do different things. The 1098-T talks about tuition, while the 1098-E talks about interest payments. Student loan servicers will send out a 1098-E form to anyone who has paid $600 or more in student loan interest the previous tax year. These forms are also due to be sent before the end of January when you receive many other tax forms, so you can have all the tax documents you need to file your tax return.
It’s also important to remember that if you have multiple student loan servicers then you might receive multiple 1098-E forms. But if you haven't paid any interest on those student loans, then this would be a reason you might not receive a 1098-E form, even if you have student loans.
Once you have this form in hand you can potentially qualify for tax deductions due to the student loan interest you’ve paid. People who have paid student loan interest in the past calendar year can deduct up to $2,500 from their taxable income. Other qualifications may be necessary as well to be eligible for this deduction.
Some of the information that will need to be filled out in a 1098 E form includes:
The 1098 C form can also be referred to as the Contributions of Motor Vehicles, Boats, and Airplanes Statement. The 1098 C form is a tax form used by donor organizations. If a donor organization receives any contributions in vehicles like cars, boats, or airplanes, then they’ll file the monetary value or sales of those vehicle donations using a 1098 C form.
On this form, the donor organization will be referred to as the “donee” and the person or organization that donated the items will be referred to as the “donor.”
If a donor gives a motor vehicle to charity then they might have to get a 1098-C form. If the vehicle they donated has a value of $500 or more, then they might be able to get a tax deduction for this donation. In general, the most they could get out of deduction would either be the value of the car when it was donated, or the value of the car that the charity sold it at, whichever is smaller.
Some of the information that will need to be filled out in a 1098 T form includes:
So if you have been in the business of buying or selling property, donating property, receiving property donations, or paying student loans, then you’ll want to add the 1098 tax form to your tax season to-do list.
