Refund of Overpaid PMI

[Ash38]

I received a check from my old mortgage company in 2021 for a refund of overpaid PMI premiums plus additional compensation for the amount of time the funds were unavailable to me for other use.  I believe this was in response to a suit filed against the bank for mishandling the PMI cancellation process.  Is this reportable income and if so, do I put it in the Other Reportable Income section of the Less Common Income area?

[MinhT1 · Accepted solution]

It depends.

The PMI refunded will be reported as Other reportable income if you had previously itemized your deductions and deducted that PMI in previous years. If you did not itemize and did not claim that PMI, then you do not report it as income.

The additional compensation, in any case, has to be reported as Other reportable income.

[Ash38]

Thank you.  I went through all of my returns for the period of time when I had the mortgage (2005 - 2014).  None of the 1098's from the bank showed any PMI paid despite the fact that I was paying it.  I did itemize, but the PMI box of the itemized deduction schedule in every return was blank so it appears that I didn't claim it.  This makes sense because my returns were done by outside preparers and they had only the 1098's from the bank to go on (I never provided further calculations of what I was paying in PMI, nor did I realize that I should have at that time).  Therefore, it seems that I would only report the additional amount ($53) that was paid as compensation for the time that I didn't have access to the overpaid PMI.  Right?    

[JulieS]

Yes, you can report the $53 as other taxable income. 

Here is how to enter that in TurboTax:

1. Select Federal on the left side menu.
2. Select Income and Expenses toward upper left.
3. Expand/ scroll down the list and find the section called, Less Common Income.
4. Scroll all the way down and select Miscellaneous Income, 1099-A, 1099-C.
5. Select Other reportable income.
6. Answer the first question Yes.
7. Enter PMI refund as the description and amount on this page, click Continue.