;
 

Search Help Topics:

You may have more Seller-Financed Mortgage (SFM) statements than TaxAct will allow you to enter (maximum of 20 for the 2020 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 "SEE ATTACHED" text 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 (Form 1040) Interest and Ordinary Dividends, 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 in the upper left-hand corner, then click Federal.
  2. Click Investment Income in the Federal Quick Q&A Topics menu to expand, then click Interest income from Seller Financed Mortgage(s).
  3. Click + Add SFM Statement to create a new copy of the form or click Edit to review a form already created.
  4. Continue with the interview process to enter all of the appropriate information.
  5. On the screen titled Interest Income - Payer's Name, enter "SEE ATTACHED" as the Payer's name, leave the Payer's SSN blank, then click Continue.
  6. On the screen titled Interest Income - Mortgage Interest, enter the total Mortgage interest, then click Continue.

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 "SEE ATTACHED" as the description for the name of the payer. You must paper file the return, including your statement of the details.

Per IRS Publication 523 Selling Your Home, starting on page 16:

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 must generally 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, or Schedule NEC (Form 1040-NR) if a nonresident alien. If the buyer is using the property as a first or second home, also report the interest on Schedule B (Form 1040), 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.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


Was this helpful to you?