I REFINANCED MY HOME THIS YEAR TO LOWER THE INTEREST AND I ALSO TOOK SOME OUT TO PAY OFF SOME PERSONAL LOANS AND DO ALSO UPGRADE TO THE HOUSE. NOW II HAVE 2 1098 FORMS WHICH DO NOT SHOW THE INTEREST THAT WAS COLLECTED IN ESCROW . THE SAME IS FOR THE TAXES PAID. THE AMOUNT OF BOTH NOT SHOWN MAKES THE RIGHT TOTAL. BUT HOW DO I GET IT ENTERED IN THE TOTAL ON THE TAX FORM? I HAVE ALREADY FIGURED OUT THE INTEREST ON THE AMOUNT FOR THE NEW MONEY I GOT SO I DON'T NEED THAT HELP. THANKS.
i do not know about the interest but money deposited into the mortgage lender's real estate tax escrow account is not deductible. you get the deduction when the money is taken out of tax escrow to pay the real estate taxes.
You can only deduct interest you actually paid. If you think the 1098 forms add up to the wrong amount, make a manual adjustment to the entry so it comes out correctly. If you don't know the correct amount, contact your lenders.
Also, you can only deduct interest on acquisition debt, not equity debt. That means you can deduct all the interest from lender 1 (assuming the whole loan was used to buy the home) but you can only deduct a portion of loan 2. For example, if loan 1 was $80,000 and you paid it off with loan 2 plus took out an extra $20,000 for bills, then your balance in loan 2 is $100,000 and only 80% of the interest is deductible. I am not familiar with how Turbotax calculates this, but you are responsible for your tax return, if you think the program is incorrect it is up to you to get the correct amount before you file.
You can only deduct property taxes actually paid to the tax authority (the city, county, school district, etc.). Money that you pay into escrow is still technically your money until it is paid to the tax authority.
I don't think the loan interest would go through or be in the escrow account. The only interest in escrow would be interest they pay TO YOU on the money being held in escrow before they pay it out for the property taxes etc.
@joannal2005 - the real estate taxes are normally not on the Form 1098.
You shouild have received a statement from the mortgage company indicating how much real estate tax they paid out of your escrow.
Somethime the mortgage company combines the Form 1098 information and the real estate taxes paid onto the same form
What you paid into the escrow is NOT tax deductible. its what is paid OUT for taxes taht is deductible....
and if you are taking the standard deduction or have over $10,000 in state income taxes to report, it won't matter in any event.
Money in the escrow account is your money, and it remains your money until the lender uses it to pay a required expense. The two most common expenses paid from escrow are property taxes and property insurance. There could be other expenses too.
The property taxes paid from the escrow account are deductible on the SCH A in the tax year they are actually paid, regardless of what tax year those taxes are paid "for".
Property insurance paid from escrow is not deductible for your primary residence, 2nd home or vacation home. Insurance cost is deductible only if the property is business use - such as residential rental property. There are other fees that could be paid out of escrow too. For example, HOA fees could be paid out of escrow. But they are not deductible unless the property is some type of business use, such as rental property.
Still have questions?Make a post