Do I need to file a 1099-INT for interest paid to a family member for a self financed personal mortgage?

[lnk-fr]

Do I need to file a 1099-INT for interest paid to a family member for a self financed personal mortgage?
If yes, is there a way to do this without having an EIN number using Turbo Tax?

[DianeW777]

Yes.  Seller financed interest is taxable income to the recipient. You can complete Form 1096 which is a transmittal and Form 1099-INT (required when interest paid is greater than $10).

•  2022 General Instructions for Information Returns
• Use the social security number (SSN) of the recipient/buyer

The interest is mortgage interest to the buyer/payer and interest income to the seller/recipient.  A Form 1098 is not required to be issued unless it was part of a trade or business transaction.

To record the mortgage interest, enter it as mortgage interest expense. The owner can deduct the interest payment as mortgage interest if the property is in the name of the buyer and is security for the loan, should default occur. 

• Use the Search box (upper right) > type 'mortgage interest > Click the Jump to... link
• You will enter the information requested 

To record the interest income.

• Use the Search box (upper right) > type 'seller financed interest' > Click the Jump to... link
• You will enter the social security number (SSN) of the payer when there is not an EIN.

You can use the W-9 form for the buyer to fill out for your files.

[lnk-fr]

"The interest is mortgage interest to the buyer/payer and interest income to the seller/recipient.  A Form 1098 is not required to be issued unless it was part of a trade or business transaction."

Did you mean Form 1096?

For me right now, the thing I would like to know the most is, do I need to file anything by 1/31 through Turbotax? Since I have no EIN and can't access the official paper forms, I want to avoid getting missing anything and penalized.   

[Opus 17]

If you are the lender, you do not issue any tax forms because you are not a bank or professional lender, because you said this was a personal mortgage.  You are still required to report the interest you receive as taxable income, but you do that without any other reporting forms. 

If you are the borrower, you do not issue any tax statements to the lender.

(A bank would issue a 1098 to report mortgage interest received, not a 1099-INT.)

[lnk-fr]

I'm very confused now because this person says "

If you receive mortgage interest of $600 or more in the course of your trade or business, you are subject to the requirement to file Form 1098, even if you are not in the business of lending money.

See https://www.irs.gov/pub/irs-pdf/i1098.pdf"

https://ttlc.intuit.com/community/taxes/discussion/re-does-a-1098-or-1099-int-need-to-be-filed-for-a...

"According to this https://www.irs.gov/pub/irs-pdf/i1098.pdf

Not in the lending business. If you receive mortgage interest of $600 or more in the course of your trade or business, you are subject to the requirement to file Form 1098, even if you are not in the business of lending money. For example, if you are a real estate developer and you provide financing to an individual to buy a home in your subdivision, and that home is security for the financing, you are subject to this reporting requirement. However, if you are a physician not engaged in any other business and you lend money to an individual to buy your home, you are not subject to this reporting requirement because you did not receive the interest in the course of your trade or business as a physician."

[Opus 17 · Accepted solution]

@lnk-fr 

Was it made in the course of your business even if you are not a professional lender?  For example, are you a real estate agent and you made the loan to help someone buy a house?  Or, are you a contractor who made a home equity loan to help someone afford a big remodeling job?  Then you made the loan in the course of your business (even though you are not a professional lender).  The interest is business income, must be reported on schedule C or your other business tax return, and you must issue a 1098.

However, just because you own a business does not mean the loan was made in the course of doing business.  If you own a dry cleaning store and you made a personal loan to a family member, then the loan was not made in the course of doing business, the loan was not a business activity.  The interest is personal income, not business income.  It is reported as personal income on form 1040 schedule B, and you do not issue a 1098.

You said this is a self-financed personal loan to a family member.  So it's not a loan made by your business.  Unless you are changing your story.