Changes to the Deductibility of Mortgage Insurance Premiums (MIP)

 

P.L. 116-94, Division Q, Revenue Provisions, section 102, retroactively extends the applicability of section 163(h)(3)(E) for tax years 2018 and 2019, and through tax year 2020, to provide for the deductibility of mortgage insurance premiums (MIP). Use Form 1098, Mortgage Interest Statement, to report MIP aggregating $600 or more, that you received during the calendar year in the course of your trade or business from an individual, including a sole proprietor.

For tax year 2018, you are not required to file or furnish corrected Forms 1098 for 2018 to report MIP for that year. However, we encourage you to make that information available to borrowers so that they can decide whether to amend their 2018 income tax returns to claim the additional deduction. The IRS strongly recommends that you file corrected Forms 1098 for 2018 to report the MIP, as this will help substantiate the deductions and avoid IRS inquiries about any deduction that does not match the information return filed with the IRS. Corrected Forms 1098 will be accepted on paper or electronically, according to the specifications in the General Instructions for Certain Information Returns, for prior years.

For tax year 2019, Forms 1098 should be filed and furnished according to the usual due dates and include MIP in box 5. If you have already furnished the borrower statement without reporting MIP, you should send a corrected statement. Requests for extensions to file or furnish Forms 1098 should be submitted according to the specifications in the General Instructions for Certain Information Returns.

For tax year 2020, report MIP in box 5 and file and furnish Forms 1098 according to the specifications in the Instructions for Form 1098 and the General Instructions for Certain Information Returns