The 1098 form reports mortgage interest and property taxes you paid during the year so you can deduct them on your tax return

The Form 1098 is a statement your mortgage lender sends you each January showing how much mortgage interest and property taxes you paid in the previous year. You use these numbers on your federal tax return to reduce your taxable income — but only if you itemize deductions instead of taking the standard deduction. The form comes from your lender because they track every payment you make and know exactly how much went toward interest versus principal.

You will receive a 1098 if you had a mortgage on a home during the year and paid at least $600 in mortgage interest. If you paid less than that, your lender may not send one, though you can still deduct the interest if you have records of the payments. The form shows up on your tax return as part of itemized deductions, which means it only helps you if your total deductions exceed the standard deduction for your filing status.

Key Takeaways

  • Form 1098 shows mortgage interest and property taxes paid during the year, which you can deduct if you itemize rather than take the standard deduction.
  • Your lender sends the 1098 automatically if you paid at least $600 in mortgage interest; you should receive it by January 31.
  • The form reports only the interest portion of your payment, not the principal, because principal is not tax-deductible.
  • You need the numbers from your 1098 to fill out Schedule A (Itemized Deductions) on your federal return.
  • If your 1098 contains errors, contact your lender to request a corrected form before you file.

Which lines on the 1098 matter for your taxes

Box 1 shows the mortgage interest you paid during the year. This is the number you will use on your tax return. It includes interest on your primary home and, in some cases, a second home or investment property. The lender calculates this by taking every payment you made, subtracting the portion that went to principal, and adding up what was left.

Box 2 shows property taxes paid through an escrow account — the account your lender holds to pay taxes and insurance on your behalf. If you pay property taxes directly to your county instead of through escrow, this box will be zero, but you can still deduct those taxes if you have receipts. Box 5 shows mortgage insurance premiums you paid, which may also be deductible in some years, though the rules change annually.

The other boxes on the form contain information your lender needs for their records but that you typically do not use on your return. Box 3 shows the outstanding principal on your loan at the end of the year, and Box 4 shows the date the loan was taken out. These are reference information only.

When you actually need the 1098 to file taxes

You need the 1098 only if you plan to itemize deductions on Schedule A. Most taxpayers use the standard deduction instead — for 2024, that is $14,600 for single filers and $29,200 for married filing jointly. If your mortgage interest plus property taxes plus state income taxes plus charitable donations and medical expenses add up to more than the standard deduction, itemizing saves you money, and the 1098 becomes essential.

If you are a first-time homebuyer with a large mortgage, itemizing often makes sense because mortgage interest in the early years of a loan is substantial. As you pay down the loan over time, more of each payment goes to principal and less to interest, so itemizing may eventually stop being worthwhile. You can recalculate each year to see which approach saves you more.

If you do not itemize, you do not need to report the 1098 numbers on your return at all. The IRS receives a copy of your 1098 from your lender, so they know what you paid, but if you take the standard deduction, the mortgage interest straightforward does not factor into your calculation.

What to do if your 1098 has errors or is missing

If the mortgage interest amount on your 1098 does not match your records, contact your lender when ready. Lenders sometimes make mistakes in calculating interest, especially if you made extra payments, refinanced mid-year, or paid off the loan early. Ask the lender to send you a corrected 1098, called a corrected 1098 or amended form. The IRS important date for lenders to send corrected forms is usually in March, so contact them as soon as you notice the error.

If you never receive a 1098 by early February, call your lender's tax department. They may have the wrong address on file, or if you paid less than $600 in interest, they may not be required to send one. In either case, you can still deduct the interest you actually paid if you have bank statements or payment records showing the amounts.

Do not file your return without resolving a discrepancy. If your return shows different numbers than the copy the IRS received from your lender, the IRS will notice and may send you a notice asking for an explanation. It is much faster to get a corrected form before you file.

How the 1098 connects to your mortgage payments

Every mortgage payment you make is split into two parts: interest and principal. In the first years of a 30-year loan, most of the payment goes to interest. By year 20, most goes to principal. Your lender tracks this split for every payment and adds up the interest portion to create the number that goes in Box 1 of your 1098.

If you made extra payments toward principal during the year, those do not appear on the 1098 because they are not interest. Only the interest portion of your regular payments, plus any interest you paid on a refinance or home equity loan, shows up. This is why the 1098 number may be lower than you expected — you are seeing only the interest, not the full amount you paid toward the loan.

State and local tax limits on mortgage deductions

Federal tax law allows you to deduct mortgage interest and property taxes, but there is a combined limit on state and local taxes (called the SALT cap). You can deduct up to $10,000 in state income taxes, property taxes, and sales taxes combined. This means if your property taxes alone are $8,000 and your state income tax is $4,000, you can only deduct $10,000 total, not both amounts in full.

Mortgage interest does not count toward this $10,000 limit — you can deduct all your mortgage interest separately. But the property tax portion of your 1098 (Box 2) does count toward the limit. If you live in a high-tax state, this cap may mean you cannot deduct all your property taxes, even if you itemize.

Frequently Asked Questions

Do I have to report my 1098 on my tax return?

Only if you itemize deductions on Schedule A. If you take the standard deduction, you do not report the 1098 numbers anywhere on your return. The IRS receives a copy from your lender, but it does not affect your filing if you do not itemize.

What if I paid off my mortgage early during the year?

Your 1098 will show only the interest you paid before the loan was paid off. If you paid off the loan in June, the form covers January through June only. You can still deduct that interest on your return.

Can I deduct mortgage interest if I did not receive a 1098?

Yes. If you paid less than $600 in interest or your lender failed to send the form, you can still deduct the interest if you have records of your payments. Keep bank statements or payment confirmations showing the amounts you paid.

Does the 1098 include interest on a home equity loan?

Home equity loan interest appears on a separate form called the 1098-H, not on the standard 1098. Your lender will send you a 1098-H if you had a home equity loan during the year and paid interest on it.

What happens if the 1098 shows more interest than I actually paid?

Contact your lender when ready and ask for a corrected form. Lenders occasionally make calculation errors. Do not file your return with numbers you believe are wrong — get the correction first.