Form 1098

• If you paid more than $600 in interest on your mortgage, you will receive a Form 1098 from your lender. This form reports the amount of interest you paid on the loan, as well as the amount of any mortgage insurance premiums you paid as part of your monthly house payment -- mortgage insurance premiums are usually rolled into the loan balance and re-calculated each year according to the terms of your mortgage. The lender furnishes a copy of Form 1098 to the IRS, as well.
  
  

Loan Information

• On Form 1098, Box 1 shows the amount of interest paid; Box 2 shows any points you paid on the loan; Box 4 shows the amount of any mortgage insurance premiums. The form also shows your name and Social Security number, and your lender's name and federal tax identification number.
  
  

Deductions

• If you itemize deductions on your annual tax return, you may take a deduction for the mortgage insurance premium on Form 1040, Schedule A, Line 13. You may deduct your entire mortgage insurance premium, as well as your mortgage interest, but total deductions begin to phase out when your adjusted gross income, AGI, reaches $100,000. The IRS does not allow you to deduct mortgage insurance premiums if your AGI is higher than $109,000, whether your filing status is "single" or "married, filing joint." If you are "married, filing separately," then the deduction ends above an AGI of $54,500.
  
  

Lump-sum Premiums

• If you paid mortgage insurance in a lump sum at the start of the mortgage, then you have to figure an allocation of the premium to the current year of the mortgage. You divide the entire premium you paid by the loan term in months, or by 84, whichever is less; for example, the IRS allows you to spread the premium expense over a maximum of seven years. You then multiply the number that results by the number of months you were paying off the loan during the year, which is 12 in every year but -- in most cases -- the first. This is the amount you deduct on Schedule A, Line 13, in the "Interest You Paid" section.