I recieved a 1098-MA Mortgage assisstence. Where do I enter it?

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You probably don't have to. Use in tax return is limited to certain situations.

1) If you itemize and deduct interest/taxes, you can only deduct portion NOT paid via 1098-MA amount. Restated - If you only paid half the mortgage, you only take half the deduction.

2) Although it is not taxable income, the amount may be used in figuring support/income for certain tax benefits - like other untaxed income is.

http://www.irs.gov/irb/2011-11_IRB/ar06.html#d0e269
  • Is there a place in Turbo Tax that you enter the 1098-MA or do you have to do the calculations yourself and deduct the interest not paid from the interested listed on your 1098?
  • I have the same question, and it is sounding like we have to figure things out ourselves and enter the net. Let's say my year-end mortgage statement says $10,000 in interest was paid on $20,000 in mortgage payments, and my IRA form 1098-MA says that the program paid $9,000 in mortgage payments. Unfortunately the IRS 1098 MA does not say how much of that $9,000 was interest, and how much was principal.

    I wonder, do I look at the proportion of my "normal" mortgage -- i.e., 50% of the payment is interest and apply. So it looks like of the $10,000 in interest paid, the IRS paid $4500 in interest (50% of their payments), and since I paid the remaining $5,500 (50% of the $20,000-$9,000= $11,000 in payments I made). So, can I only deduct $5,500 in mortgage interest?
  • disgruntled40 , you've got it exactly right. Pay half the mortgage, get half the deductions.
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  • FWIW, last year, I think because it didn't itemize the interest versus principal on the 1098-MA, and because there was even less info out there on Turbo Tax at the time....I ignored it. And you know what? No one ever followed up with me on that. That's not strictly what one is supposed to do, but so it is.
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I contacted the IRS the other day.  The woman I spoke with was nice enough, but she really didn't know anything about the 1098-ma and just read verbatim from publication 936.  However, during the course of the conversation, I was able to figure it out:

The 1098-MA should list the TOTAL amount of mortgage payments made for the year in Box 1, followed by the amount of that total that was paid in the form of mortgage assistance in Box 2 and the amount of that total that was paid by you in Box 3, unless you live in California where my 1098-MA had a blank Box 3 with the notation that "California does not accept or collect homeowner payments in connection with its programs." (it must violate some privacy law in California and don't even get me started on privacy laws).  Anyway, if you live in California, you should just be able to subtract the amount in Box 2 from the amount in Box 1 to get your Box 3 total, although if there is a way you can go back and actually verify that this is the amount you actually paid in mortgage payments last year, it would be a good idea since the amount in my Box 1 was incorrect since I had subsequently received a corrected 1098 form and the amounts that were listed in my 1098-MA form Box 1 and 2 were based upon my original 1098.  I have not received a corrected 1098-MA.  

OK, so that being said, here is the gist of it:  the "safe harbor" method.  Say your monthly mortgage is $1,000 /month of which $300 is principle, $600 is interest and $100 goes into an escrow account for your real estate taxes and also say you aren't paying mortgage insurance.  You received six months worth of mortgage assistance last year, so you receive a 1098-MA that has $12,000 in Box 1, $6,000 in Box 2, and $6,000 in Box 3.  In reality, you made 6 mortgage payments last year, and of these 6 payments, a total of $3,600 ($600x6) was what you paid in interest.  However, the safe harbor method allows you to claim your TOTAL mortgage payments for the year which were $6,000 because it is less than the TOTAL of the sum of your 1098 Box 1 - $7,200 ($600x12), Box 4 (0 - assuming you didn't pay any mortgage insurance) and Box 5 - $1,200 ($100x12) which totals $8,400.  

Now say you were making the same payments as above but you only received three months of mortgage assistance last year.  You wouldn't be able to use the safe harbor method because your TOTAL payments would not be less than the amounts in Boxes 1, 4, and 5 of your 1098.  Your 1098 would still have a total of $8,400 from the sum of Boxes 1, 4 and 5, however, your TOTAL mortgage payments during the year would equal $9,000 ($1,000 x 9).  Therefore, you would need to show the interest that you actually paid during those 9 months of payments you made which would equal $5,400 (9 x $600).   

I have no idea how you would be able to make these computations without having a breakdown of each monthly payment made last year to reflect principle, interest and escrow (assuming you have an escrow account).  I can log on to my lender's website and pull up my payment history which shows this information so if you cannot do that, you will need to request it from your lender.
  • WOW!  someone named Simone just ansered when I finally got through on the help line regarding this, she put me on hold when I told her what I was calling about and then hung up on me - she probably didn't know what the hell she was doing, thanks for wasting my time on hold Simone....I needed two questions answered which I told her - 1, how to download a saved file from working on the internet when we purchase the software - as I did last year, so we can file several returns for our household, which you can't do online for one prices.  2. How to enter information from form 1098-MA.  I don't agree with what I'm seeing inthe answers here. I pay mostly principal on my mortgage loan.  I was inthe program 3 months, but the 1098-ma shows them making 4 months  of payments,the total of which is in box 2 and only showing 3 months of my portion in box 3 because I made January 2012 payment in January and they made the actual pyament for January  in December 2011 to add to the confusion..however box 1 only contains the total of the two, not what I paid for the entire year in mortgage payments.  The amount they paid will have to be paid back to them when I sell the property, the increments of repayment are lowered by the number of years that pass.  So, it doens't make sense that my taxable income or mortgage interest deduction would be affected by this program.  Who is to say what portion of my mortgage payment they made since I mostly pay toward principal...maybe I can say their portion was all principal.  This is insane.  I don't think I'll be  using turbotax again.  I used it for many years but today's experience was just too much.
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  • Ok, so we received a 1098MA, but it was for the whole year, we did not make any mortgage payments at all.  Do we need to imput the 1098MA information somewhere in TurboTax or do we have to file a paper form.  We are not claiming any mortgage interest for 2012 since we did not pay any, so that is simple enough.  We also did not pay any property tax since it was part of our mortgage payment, can we claim that, or should we just leave that blank too?
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I found this very confusing and frustrating.  I had mortgage assistance for part of last year. I read all the documentation and comments about the 1098-MA and was still confused. Turbotax support not helpful-- an hour on hold for an agent to transfer me to a closed department. I called the IRS and they were better. After asking some qualifying questions my situation basically comes down to deducting the numbers on my 1098 and ignoring the 1098-MA.
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    WHAT A LOAD OF SH&*!!!!  It sounds to me like the majority of the people who are filing takes using the 1098-MA will be audited by this summer....including myself being that after reading all of these comments I had to pour myself another glass of wine.  But I digress...
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      On the IRS website and forms they say:

      You can use a special method to compute your deduction for mortgage interest and real estate taxes on your main home if you meet the following two conditions.

      You received assistance under:

      A: State Housing Finance Agency (State HFA) Hardest Hit Fund program in which program payments could be used to pay mortgage interest,

      or

      B: Emergency Homeowners' Loan Program administered by the Department of Housing and Urban Development (HUD) or a state.

      and

      You meet the rules to deduct all of the mortgage interest on your loan and all of the real estate taxes on your main home.


      If you meet these tests, then you can deduct all of the payments you actually made during the year to your mortgage servicer, the State HFA, or HUD on the home mortgage (including the amount shown on box 3 of Form 1098-MA, Mortgage Assistance Payments), but not more than the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received), box 4 (mortgage insurance premiums), and box 5 (real property taxes).

      However, you are not required to use this special method to compute your deduction for mortgage interest and real estate taxes on your main home.

       ++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

      If we are not required to use this "special method" than what other method can we use?
      • TJ2012 quote from IRS Pub 936 and 1098-MA instructions is correct; However, Pub 906 also says (in next paragraph) "If you qualify for mortgage assistance payments for lower-income families under section 235 of the National Housing Act, part or all of the interest on your mortgage may be paid for you. You cannot deduct the interest that is paid for you. "
        http://www.irs.gov/publications/p936/ar02.html

        So, you have possible support for doing things either way; If it were my return, I'd take the full deductions as on the 1098 from the mortgage company, since that's the max benefit, and assume my 1098-MA reflected a case that allowed me to do so.

        In any event, doesn't seem to be a required entry in TT for 1098-MA forms ...
      • It looks like the mortgage assistance payments for lower-income families under section 235 of the National Housing Act and the Hardest Hit Fund are two differant programs. The mortgage assistance payments under section 235 looks to be a permanent program for low income people from back in the 90s and earlier, where as the Hardest Hit Fund is a new temporary program. So not sure that the paragraph about section 235 was meant to apply to the Hardest Hit Fund.

        For me it if I proportional deduct the 25% that they paid of my interest, I would loose about $1800. :-(

        Would it have killed them to explain what to do a little better? (http://www.irs.gov/pub/irs-pdf/f1098ma.pdf) Or even the state organization running the program "Please consult a tax professional regarding tax liability of the benefit assistance provided by Keep Your Home California"
      • This is crazy..The whole Keep your home ca" program should of explained this prior or you need to have a much better answer.. I simply need to know  how to file this new form 1098-MA..HELP!
      • The different programs available through the Hardest Hit Fund would dictate how or if you would need to adjust anything in your mortgage interest deduction.  I received what is considered a "loan" from HHF.  There is no differentiation from what is paid by the fund to be designated to interest or principle or insurance or taxes that I have all escrowed.  The statement I received from my mortgage lender stating how much interest was paid to them is all I need for my taxes.  The loan between me and the Hardest Hit fund have nothing to do with affecting my deduction - I'm not paying them interest - its an interest free loan.  For the other programs offered, I do not have an answer for you.  I would recommend making a call to your Hardest Hit Fund representative to see if they can give you further direction.
      • My 1098-MA shows all of what was paid, NOT the interest only. I have no idea how to figure out what that was. My program is a grant that pays our payments for 12 months, They only paid for 4 months of 2011 and the amount on my form is more than my interest for the year + my property taxes. Any freaking ideas? My loan program coordinator said to go to a tax professional- that's it!
      • I don't know what to do and I cannot afford to go to a "tax advisor" because I haven't worked in over a year.  I have no idea if I'm in a "hardest hit" program.  I qualified for the Keep Your Home California Unemployment Mortgage Assistance Program and received six months where they paid my mortgage.  I can log into my loan servicer's website (CalHFA) and pull up my loan activity and determine exactly what the dollar amount was for the interest during those months they paid and subtract it from the amount showing on my 1098, but is that something I have to do or do I fall under the "Safe Harbor" method that is described at http://www.irs.gov/irb/2011-11_IRB/ar06.html:

        For taxable years 2010, 2011, and 2012, this notice provides a safe harbor method pursuant to which a homeowner may deduct on his or her federal income tax return an amount equal to the sum of all payments the homeowner actually makes during that year to the mortgage servicer, HUD, or the State HFA on the home mortgage, but not in excess of the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in box 1 (mortgage interest received), box 4 (mortgage insurance premiums) for years 2010 and 2011 only, and box 5 (real property taxes). This safe harbor method of computing the homeowner’s deduction applies for a taxable year if (1) the homeowner meets the requirements of §§ 163 and 164 to deduct all of the mortgage interest on the loan and all of the real property taxes on the principal residence, and (2) the homeowner participates in the EHLP, an SSSP, or a State Program described in the Appendix to this notice in which the program payments could be used to pay interest on the home mortgage.

        It says "may deduct on his or her federal income tax return an amount equal to the sum of all payments the homeowner actually makes during that year ... but not in excess of the sum of the amounts shown on Form 1098  box 1, box 4 and box 5."  THIS MAKES NO SENSE!  I made exactly six months of mortgage payments in 2011 and Keep Your Home California made the other six, so it's telling me I can deduct what I actually paid and then turns around and says but not greater that box 1 which is the total mortgage interest for the year.  So what is it?

        Meanwhile, what about my real estate taxes that are wrapped into my mortgage payment and are paid from my escrow account??  Can I claim the entire amount of my real estate taxes paid??
      • Best case is you can deduct what's on the 1098 - and no more. Good for taxes and interest ...
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      Went to a Brass Tax Seminar this Last December(2013). They told US and even instilled in our Seminar Update Outline Book....in BOLD LETTERS...."Do Not use the safe-harbor in these situations! Interest Paid by Mortgage assistance payments is deductible".

      BUT I'm still trying to find MORE about this 1098MA.

       

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        Ok so what if Box 1 and Box 3 are the same and nothing else marke?
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          Ok.....we were paid one lump sum to lower our principal.  This happened in December.  We made the payment all year exlcept for two months that our lender  allowed skip a payment  I still have NO CLUE what to .with this 1098-MA and I don't even know if its correct.
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            If box 3 has a value then you can use that value on you long form (schadule A) boxes 1 and 2 are your assistance from the Housing or state. if box 4 has an amount you can claim it as well
            • So in other words if box 3 says 25,000 then I can claim the $25,000 on my taxes? What about my lender 1098 can I claim what they sent me as well?
            • I don't think you lender will be sending you one. But if they did you need to make sure that is what you paid of your own money. And yes box 3 is what you can claim on schadule A. And most of the time is the difference of box 1 and box 2.
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            I think I 'm more confused then ever. my Mortgage Assistance went into effect in April, so I paid Jan- and Feb, but my box 3 says 0$.
            Do I need to figure out what the interest was for those 2 months? Should I even bother, and go back to my turbo tax and just put  in zero for interest payments since it was only the two months?
            Or since the interest payment says it was 3,129$, do I divide by 12 find out the interest for one month?
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              this does not apply to me. why such difficulty this year?
              • If it doesn't apply to you, then you have no clue how difficult this is to decipher.  Why are you even reading these posts if it does not apply to you?  It is difficult to understand and not straightforward at all.
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