@Crookedtop wrote:
Thanks. I submit the form as a courtesy to the family member for providing the loan. I don't use the deduction as it falls under the standard deduction amount. I just want to make sure I am not running afoul of the law by not filing the form. Seems like you need to be a business to create a FIRE account with the IRS.
This is a bit unclear.
If you are the Lender, you are not required to issue a 1098-INT for interest payments you received, unless you are in the regular business of lending. You may issue a 1098 as a courtesy, but it is not required. There are several online companies that will help you e-file a 1098, the cost should be $5-10 each. The company should e-file the 1098 with the IRS and mail a PDF to the borrower.
If you are the Lender, you are required to report and pay income tax on the interest income you receive, regardless of what paperwork might be created. The income might not be taxable if your total taxable income is less than your standard deduction, but the interest income is still considered taxable income to you.
If you are the borrower, you don't issue ANY tax forms to the lender. You have no standing to issue a 1098 because that form it only issued by the lender, and you don't issue a 1099-INT unless you are a financial institution in the business of paying interest income to depositors. You can deduct the mortgage interest you pay, or you can choose not to deduct it, depending on your other tax situations. The lender is required to keep their own accurate records of interest payments they receive, and report them as taxable income. You are free to send a letter or email to your family member, as a courtesy reminder of the interest you paid, but you don't create and file any tax forms like 1099s or 1098s.
