Hi everyone, hoping for a sanity check on something my lender told me.
The Situation:
Closed on Refinance: 12/19/2025 (Originator: Bank B)
Prepaid Interest at Closing: ~$1,400 (covering 12/19 – 12/31/25).
Loan Sold: Transferred to Bank C in mid-January 2026.
First Montly Payment Due: Feb 1, 2026.
The Issue: I asked Bank B (the originator) for my 2025 Form 1098 since the prepaid interest (~$1,400) is well over the $600 reporting threshold.
They explicitly told me: "No 1098 will be issued for 2025. The prepaid interest will appear on your 2026 statement from Bank C."
My Questions:
Is this correct? Since the interest was physically paid/collected at closing in 2025, shouldn't it be deductible on my 2025 return? It seems wrong to deduct 2025 prepaid interest on a 2026 return.
How do I handle this in TurboTax? If the bank refuses to issue the form, can I just use the amount listed on my Closing Disclosure (Section F) and enter it as "Interest not reported on a 1098"?
I want to take the deduction this year (2025) but want to make sure I won't get flagged if the lender doesn't report it to the IRS until next year.
Thank you! I appreciate the help!
