Form 1098 - Entering Points Not Reported
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You may need to enter points not reported to you on Form 1098 Mortgage Interest Statement to determine if they are fully deductible in the current year or if you must deduct them over the life of the loan.

To enter points not reported to you:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Itemized or Standard Deductions in the Federal Quick Q&A Topics menu to expand, click Interest expenses, click No, then click Yes.
  3. Continue with the interview process to enter all of the appropriate information.

Additional Information

Per IRS Publication 936 Home Mortgage Interest Deduction, on page 5:

Points

The term “points” is used to describe certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Points may also be called loan origination fees, maximum loan charges, loan discount, or discount points.

On page 7:

A borrower is treated as paying any points that a home seller pays for the borrower's mortgage. See Points paid by the seller, later.

General Rule

You generally can't deduct the full amount of points in the year paid. Because they are prepaid interest, you generally deduct them ratably over the life (term) of the mortgage. See Deduction Allowed Ratably next. If the loan is a home equity, line of credit, or credit card loan and the proceeds from the loan are not used to buy, build, or substantially improve the home, the points are not deductible.

For exceptions to the general rule, see Deduction Allowed in Year Paid, later.

Refinancing. Generally, points you pay to refinance a mortgage aren't deductible in full in the year you pay them. This is true even if the new mortgage is secured by your main home.

However, if you use part of the refinanced mortgage proceeds to substantially improve your main home and you meet the first six tests listed under Deduction Allowed in Year Paid, earlier, you can fully deduct the part of the points related to the improvement in the year you paid them with your own funds. You can deduct the rest of the points over the life of the loan.

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