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Mortgage interest discrepancy

My bank received my December 2015 payment before the last day of the month, but for whatever reason didn't credit it till January 2016. Therefore my 1009-INT for 2015 was short $500 and change. I reported the full amount on Schedule A, and attached a statement.

But now of course my 1099-INT for 2016 is too low, so my schedule A amount will be $500 and change greater than the 1099-INT amount. I'm filing electronically for the first time this year, using H&R Block's tax-prep software, but there doesn't seem to be any way to attach a statement. (In a chat session and a phone call, two reps could not even understand the question, let alone help me, and "sorry, no supervisor is available.")

Question: Should I just not worry about a statement, since the amount I'm reporting will be greater than the amount the bank reported to the IRS? I'm asking if it's at all likely that the IRS will flag my return for investigation? If so, I'll file on paper.

Reply to
Stan Brown
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I can understand why they were confused - because you're confused. A 1099-INT reports interest a bank pays you. A 1098 reports mortgage interest you pay a lender.

Assuming you do mean mortgage interest you paid, you can enter any amount you want on Schedule A. If the amount you enter on line 10 is less than that reported on Form 1098, the IRS will accept your number without question (you're paying more tax). If the amount you enter is greater than the amount reported on Form 1098, the IRS will send you a letter requesting explanation.

Ira Smilovitz, EA

Reply to
ira smilovitz

I agree with "ira" that you don't need to worry, but "the other guy" (TurboTax) allows you to attach a statement to the 1098-INT (which may or may not be filed with your tax return), or to add a worksheet or statement to explain a line on a form or schedule; in your case, Schedule A line 10.

In either case, my understanding is that computers do not read attached statements, so that, if an IRS computer asks for an explanation, _it_ will not read the statement. It might be helpful to have the statement with the return, but an off-return explanation will do as well.

-- Arthur L. Rubin, AFSP, CRTP, Brea, CA

Reply to
Arthur Rubin

If the amount you enter is greater than the amount reported on Form

1098, the IRS MAY send you a letter requesting explanation.
Reply to
Taxed and Spent

On Mon, 27 Mar 2017 10:11:20 EDT, Stan Brown wrote: [Timing difference led to bank underreporting interest I paid in 2015 and overreporting it by the same amount for 2016.]

Thanks for the replies -- that was fast!

Ira, it was indeed a 1098. I looked at my bundle of tax statements and picked the wrong one, because this bank paid me interest on mortgage escrow as well as collecting interest on the mortgage.

I don't mind a letter questioning the discrepancy -- and Ira said even that won't happen for 2016 taxes since my number is lower than the 1098. I was just afraid of triggering some more intrusive process.

Arthur says that TurboTax seems to allow you to add explanations, so maybe I'll consider it for next year. This is my first experience with tax-prep software in more than a decade, and I'm underwhelmed by Block's software. The one solid thing it did was confirm my own calculations, but Block's own staff couldn't answer some pretty basic questions about the software.

Reply to
Stan Brown

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