We recently discussed this issue with an IRS, and their unofficial guidance is that banks should be selecting a single payor of record when reporting mortgage interest on 1098 forms. Both the regulations and the instructions for Form 1098 refer only to a single “payor of record,” which should be the principal borrower on the loan. Form 1098 Instructions26 CFR 1.6050H-1(b)(3). The IRS’s unofficial guidance is that banks should not be splitting 1098 interest reporting and should report all interest as paid by one borrower, the principal borrower.
Are we allowed to split interest reporting on IRS 1098 forms between two borrowers?
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