Yes, the interest paid and/or receivedof a seller-financed loan on an Installment Sale must be included on your income tax return.  If you're the seller, report the interest income on Schedule B, and the buyer reports the interest as mortgage interest on Schedule A, if enough to claimed itemized deductions.

Here's how to enter seller-financed loan interest income on Schedule B:. 

1. Log In to Turbo Tax,
2. Under Income and Expenses tab, scroll all the way down until your get to "Interest From Seller-Financed Loan", then click edit.
3. The next screen is a question "Any seller-financed loan?".
4. If your answer is yes on the question above, it will take you to Seller-Financed screen.
5. Under Seller-Financed screen, enter the buyer's name, address, SSN of the buyer, and the amount  of interest buyer paid to you.
6. The amount of interest will be transferred over to Schedule B of 1040 form.

Thank you!   That is what I thought but wanted to be sure.  Also, if you could answer, do I need to give the buyer a Form 1098?

You must file a Form 1098 for any interest paid to them on the loan for the previous year if it was more than $600.

How to file Form 1098:

1. Gather payment records from the borrower

2. Download Form 1098: Mortgage Interest Statement and its corresponding instructions. The form and instructions are available from the Internal Revenue Service website at www.irs.gov.

3. Enter your information following the instruction.

4. Submit Copy A of the completed form to the IRS. Details regarding the address for paper submissions and the procedure for electronic submissions are found in the IRS Publication entitled "General Instructions for Certain Information Returns (Forms 1097, 1098, 1099, 3921, 3922, 5498, and W-2G)." Consult the section entitled "Where to File" for the address to send paper reports and the section entitled "Electronic Filings" to get details regarding electronic submission.

5.Send Copy B of the completed form to the borrower. Mail the form to the official address as reported on the form. Use a proof of mailing service such as registered or certified mail.

6. Retain Copy C for your records. Keep a copy of the completed form for future reference.

I don't have an income & expenses tab. Mine says "Wages & Income".  There are limited options  and none for "Interest From Seller-Financed Loan". I am using the Premier edition.

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@sean77 wrote:

I don't have an income & expenses tab. Mine says "Wages & Income".  There are limited options  and none for "Interest From Seller-Financed Loan". I am using the Premier edition.

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Click on Federal Taxes

Click on Wages & Income

Click on I'll choose what I work (if shown)

Under Interest and Dividends

On Interest From Seller-Financed Loans, click the start or update button

Found it buried under "Less Common Investments and Savings". 

Thanks!