Seller-Financed Mortgage More Than 20 Forms

You may have more seller-financed mortgage (SFM) statements than TaxAct will allow you to enter (maximum of 20 for the 2019 tax return).

If you have more than 20 SFM statements, you can still complete your tax return in TaxAct, but you will not be able to e-file.

To bypass this limitation in a way that ensures the correct amounts will be transferred to the main return, total the amounts of each SFM statements into one amount. You will type the text "SEE ATTACHED" into the issuer name field and enter the consolidated amount. 

Next, create an attachment detailing each of the SFM statements as they would be displayed on Federal Schedule B, and submit that statement with the rest of the return when you mail it to the IRS. You could provide that detail on a handwritten sheet of paper or use a spreadsheet or document program to create the details.

To enter the interest income from a seller-financed mortgage into the TaxAct program:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click the menu icon in the upper left-hand corner, then select Federal.
  2. Click Investment Income in the Federal Quick Q&A Topics menu to expand the category and then click Interest income from seller financed mortgage(s)
  3. Click +Add Federal SFM Statement to create a new copy of the form or Review to review a form already created 
  4. On the first screen enter the text "SEE ATTACHED" in the field Payer's name: and leave blank the field for the social security number
  5. Click Continue and enter the total amount of interest
  6. When you print the return, you will see the total interest listed on line 8a of Federal Form 1040 and IF the amount entered in total requires Federal Schedule B to print with the return you will see the text "SEE ATTACHED" as the description for the name of the payer
  7. Paper file the return including your statement of the details 

Per IRS Publication 523 Selling Your Home, page 17:

Report any interest you receive from the buyer. If the buyer is making payments to you over time (as when you provide seller financing), then you generally must report part of each payment as interest on your tax return. Report the interest portion of the payment as ordinary income on Form 1040 or 1040-SR, line 2b. If the buyer is using the property as a first or second home, also report the interest on Schedule B (Form 1040 or 1040-SR), Interest and Ordinary Dividends, to Form 1040 or 1040-SR and provide the buyer's name, address, and social security number. There is a $50 penalty per requirement for failing to meet any of these requirements.

Note. If either you or the buyer is a nonresident or resident alien who doesn't have and isn't eligible to get a social security number, an individual taxpayer identification number (ITIN) may be provided instead. If you don't have an ITIN, apply for one by filing IRS Form W-7, Application for IRS Individual Taxpayer Identification Number.

For more information on installment sales, see IRS Publication 537 Installment Sales.