How to Report Form 1098-MA

Report Form 1098-A

Taxpayers that receive mortgage assistance under the Housing Finance Agency Innovation Fund for the Hardest Hit Housing Markets (HFA Hardest Hit Fund) or the Emergency Homeowners’ Loan Program (EHLP) receive Form 1098-MA. Recipients of Form 1098-MA may use a safe-harbor deduction computation in determining their home mortgage interest deduction on Schedule A. Preparers should refer to IRS Publication 936 for additional information on mortgage assistance payments.

Safe-harbor deduction computation

The taxpayer may use a safe-harbor method to compute the deduction for mortgage interest, mortgage insurance premiums, and real property taxes on the main home if they meet two tests.

1. The taxpayer meets the rules to deduct all of the mortgage interest on the loan, all of the mortgage insurance premiums, and all of the real property taxes on the main home.

2. The taxpayer participated in an HFA Hardest Hit Fund program in which program payments could be used to pay mortgage interest or the taxpayer participated in an EHLP.

If the taxpayer meets these tests, then they may deduct an amount equal to the sum of all payments the taxpayer actually made during the year to the mortgage servicer, the State HFA, or HUD. However, the amount the taxpayer may deduct cannot exceed the sum of the amounts shown on Form 1098, Mortgage Interest Statement, in Box 1 (Mortgage interest received from payer(s)/borrower(s)), and any real estate taxes and mortgage insurance premiums reported in Box 4. However, the taxpayer is not required to use this safe-harbor method to compute the deduction for mortgage interest, real property and mortgage insurance premiums taxed on their main home.

Reporting on the tax return

Home mortgage interest is reported on Schedule A , line 10. Real estate taxes are reported on Schedule A,  line 6. Qualified mortgage insurance premiums are reported on Schedule A, line 13. When Form 1098-MA is received, the amounts from Form 1098 may need to be reduced when entered on Schedule A by using the safe-harbor deduction computation.

NOTE: Do not confuse Form 1098 and Form 1098-MA. Form 1098 includes the information for home mortgage interest, real estate taxes, and qualified mortgage insurance. When Form 1098-MA is received, the amounts on Form 1098 may need to be reduced when entering those deductions.