This story hasn’t hit the mainstream media, yet, but as Tax Professionals we’re watching it closely.
Your Form 1098 may be wrong.
In this case, we’re talking about the straightforward Form 1098 that reports mortgage interest. Chase Bank gave hurricane victims the option of postponing 3 months’ worth of payments, with the agreement that the amount would be added to the end of their loan.
Great, some people took them up on it. The problem is that Chase didn’t do what they had offered to do but instead charged the interest on those payments in addition to regular interest and reported it on the 2018 Form 1098. This meant that for many mortgage holders they had little to no principal on their loan. Not only was the calculation wrong, but it meant they would pay MUCH MORE interest because the principal wasn’t properly reduced.
Ask your Tax Professional to run a quick amortization on your Form 1098. Is it correct?
I talked about this during a recent Tax Minute:
You may also receive other forms of Form 1098:
Form 1098-C: This shows the details of donations of automobiles, boats and airplanes to charitable donations.
Form 1098-E: This reports the interest paid on qualified student loans during the tax year. The form is sent if you paid at least $600 in interest.
Form 1098-T: This provides information about post-secondary tuition and related fees during the year. This is prepared by the educational institution and be used to calculate education-related tax deductions and credits.
The best solution this year is to watch and recalculate all of your forms. The last-minute government shutdown and massive tax changes have resulted in a lot of confusion.