WHY did you issue a 1098 form at all ???? YOU are not a bank or in the business of holding mortgages so YOU did NOT have to issue a 1098 form. If you were going to split it why did you not issue 2 forms ... 1/2 from each of you ???
Now your options are :
1) you each simply report the portion you are responsible for and explain what happened if the IRS ever questions it
2) the person whose SS# is on the 1098 as the issuer ( you could only have entered one) completes their return without the interest and takes note of the bottom line and then adds the interest and again notes the bottom line. This way you know the effect the interest had on the return and the other party owes you 1/2 of the difference in the taxes.
