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Which 1098 do I give the IRS when one shows $12 in points and the other shows $0 in points?

Which 1098 do I give the IRS (the corrected with no points) or the original with 12K in points?

DETAILS: (1) I paid $12K in points: In 2009 I bought a principal residence & paid 12K in "points". The HUD closing statement calles it a "Loan Origination Fee which meets the conditions described here for federal tax deductibility:

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"Are origination fees tax-deductible?" (The short answer supposedly is "yes".) (2) The loan was sold to another bank who originally provided a 1098 with the $12K in box 2 titled "Points paid on purchase of principal residence".

(3) On April 12th, I received a CORRECTED 1098 which removed the points! It lists zero in box 2!

(4) I called the bank who said that loan-origination fees are not deductible; only points are deductible; that's why they removed it. Huh?

They said if I want to show points in box 2, I have to go to the original bank and get them to change whatever it is they provided to the second bank.

QUESTION: Which 1098 should I give to the IRS?

And, can you give me advice, based on your experience, what is going on (I'm thoroughly confused by the 12K appearing and then disappearing as a deduction.)

If the loan origination fee isn't a deduction, where does it go on the 1040 schedule A?

Reply to
LM
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I would sure use the HUD-1 settlement statement as my authority to claim lines 801 and 802 of the HUD-1.

Reply to
Arthur Kamlet

Neither. The IRS already has the 1098, and if it has two from the same issuer it will go with the corrected one. If you have deductible points not reported as such on a 1098 you put them on line 12 of Schedule A.

Phil Marti VITA/TCE Volunteer

Reply to
Phil Marti

The answer to that specific question is "none of the above". You don't submit the 1098 to the IRS; the mortgage company does.

Reply to
Don Priebe

The first 1098 showed points of %12,843.75 but the "corrected" 1098 shows $0. After reading this, and looking for lines 801 & 802, I realized I was previously working off the title company "estimate of closing costs" (which was exact but not the actual "closing statement". It has no line 801 or

802.

Buried in the paperwork, I found a long sheet of paper called the "Uniform Settlement Statement" which has the following lines 801 and 802:

801 = Loan Origination Fee = 2.500% Lender = 12,843.75 802 = Loan discount = [blank]

Should I try to shrink this long sheet of paper down to 8 1/2 x 11 size and submit it with my taxes? I already tried getting the bank to fix the "corrected" 1098 which shows 0 in the points line. :(

Reply to
LM

Am I in trouble then?

That means the IRS has two 1098 forms (the first showing $12,843.75 in "loan origination fees" and the second "corrected" 1098 showing $0.

But I have a bona fide "Uniform Settlement Statement" showing lines $12,843.75 in line 801 (and 0 in line 802).

Any advice?

Reply to
LM

Can I breathe a sigh of relief (that the $12K is deductable)?

Line 10 of schedule A says: "Home mortgage interest and points reported to you on Form 1098"

Line 12 of schedule A says: "Points not reported on Form 1098".

For deduction purposes, they appear to be treated the same (just on a different line). If so, why do they even have the different lines. Is there a (tax) gotcha later on?

Will it make a difference (taxably speaking) which line the $12K goes on?

Reply to
LM

They can automate the matching of line 10 items, but the presence or absence of a 1098 doesn't determine deductibility. Thus lines 11 and

12, which avoids false indications of overclaims. Especially with points, which can be fully deducted in one year only under limited circumstances, they need a place for numbers not reflected on a 1098.

Phil Marti VITA/TCE Volunteer

Reply to
Phil Marti

No need to attach it. But definitely save it in cae the IRS sends you a notice saying they have no proof it was ever made. That's the time, if ever, you will have to send it.

Reply to
Arthur Kamlet

Neither.

Did the first bank give you a 1098? They're the one you paid the points to, right?

Seth

Reply to
Seth

Good question. As far as I know, it's the same bank but they must have sold the loan from the loan broker to the bank or something because I've always paid the same account but got notices that the loan was transferred.

Anyway, only one company has sent me a 1098, and of those 1098s, I only have two. The original with $12 in points and the "corrected" 1098 with 0 in points.

I'm less worried now that I know that I just put the HUD statement $12 in points on a different schedule A line.

My main worry now is how they treat these valid points taxwise.

The question now is:

- What's the taxable difference between valid points from a 1098 versus just-as-valid points not listed on a 1098?

Besides going on a different line in schedule A, is there any difference in their tax treatment?

Reply to
LM

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