Tax season is upon us. Among the things this means is that taxpayers are seeing a lot of tax documents. Sometimes, changes are made to such documents. Recently, some changes were made to a tax form that regards something many people here in the U.S. claim deductions in relation to: mortgage loan interest payments. We discussed deduction issues related to mortgages in a previous post.
The tax document in question is Form 1098. This is a form sent by mortgage lenders to taxpayers and the Internal Revenue Service that contains information on the interest paid on a given mortgage.
The change that has happened regarding this document is that the amount of information about a mortgage loan that lenders are required to include in the form has increased.
This change, along with other factors, is leading some to speculate that the IRS might be upping its scrutiny of mortgage deductions. Such other factors include: the complexity of the laws regarding these deductions, the high overall monetary amount of such deductions and the IRS receiving criticism for its oversight of these deductions.
So, the level of scrutiny the IRS is directing towards this class of deductions may be worth keeping an eye on in upcoming months.
What can a taxpayer with a mortgage do in response to the possibility of such increased scrutiny? Well, for one, as always, it can be critical for such an individual to exercise care that mortgage interest deductions they claim comply with tax law.
Also, when a mortgage deduction they claimed does draw IRS scrutiny and ends up triggering an audit, it can be important for a taxpayer to understand what rights they have during the audit process and what steps it can be important to take when facing an audit. Skilled tax attorneys can provide audit-related guidance to taxpayers.
Source: Chicago Tribune, “IRS may be stepping up scrutiny of mortgage deductions," Kenneth R. Harney, Feb. 14, 2017