Do we divide the interest by 4 and each use that amount on our individual tax return? Do we each do our taxes normally, include all of the interest on each return and just use the one that is most advantageous? Help!
2007-03-20 04:36:21 · 3 answers · asked by gt3571a 1 in Business & Finance ➔ Taxes ➔ United States
We are all listed on the mortgage. Do we divide the interest by 4 and each use that amount on our individual tax return? Do we each do our taxes normally, include all of the interest on each return and just use the one that is most advantageous? Help!
2007-03-20 04:58:23 · update #1
Whether all four names are on the title is irrelevant or unimportant in this case. Who actually made the mortgage payments? If only one did, only that person can report the deduction, if just two, only those two can report it, and so forth.
If you all paid the mortgage equally, then all four of you would report it on Schedule A or Schedule E (if a rental) equally. However, so the IRS does
not get confused, I would highly suggest you report it this way:
Total Mortgage Interest - Per 1098 $ 20,000.00
(Less) Reported by xxx-xx-xxxx ( 5,000.00)
(Less) Reported by xxx-xx-xxxx ( 5,000.00)
(Less) Reported by xxx-xx-xxxx ( 5,000.00)
Net 5,000.00
Friend # 1 Would Show the Social Security numbers of the other 3. His net
would be $ 5,000.00. Friend # 2 Would Show the Social Security numbers of
the other 3, and so forth.
That way, there is a "trail" that the IRS can use to determine whether the available deduction was used properly or improperly.
Good question.
2007-03-20 07:45:43 · answer #1 · answered by bold4bs 4 · 0⤊ 0⤋
That depends. Are all 4 of you on the mortgage? Only those persons who are listed on the mortgage can take a deduction for the mortgage interest paid.
If the Form 1098 is listed in one name and SSN only, that person must include a note with their return indicating the names and SSNs of all other borrowers legally entitled to share the deduction. Those other borrowers should include a note with their returns referenceing the name and SSN of the primary borrower listed on the Form 1098. Yes, this does mean that none of you can e-file; you must file paper returns.
You each claim the actual amount of interest you individually paid. Assuming that you split the payments equally, you each claim 1/4 of the total interest.
2007-03-20 04:55:53 · answer #2 · answered by Bostonian In MO 7 · 2⤊ 0⤋
you better ask your accountant. this is a tricky one
2007-03-20 04:44:20 · answer #3 · answered by star 4 · 0⤊ 3⤋