Written by Victoria Daka, Regulatory Compliance Counsel
While credit unions complete tax reporting requirements for 2015, we thought it would be a good time to note that next year there will be changes to this process. A new law passed in July, 2015 included additional reporting requirements for credit unions that receive mortgage interest. Just to be clear, this will impact next year's reporting, as it applies to mortgage interest received in 2016.
To meet this law's requirements, the Internal Revenue Service added two additional reporting requirements and resized the 2016 version of Form 1098. Credit unions will be required to report mortgage insurance premiums in box 5. This still applies only where a borrower pays a credit union $600 or more in mortgage interest on any one mortgage during the calendar year. Second, credit unions must report the address or description of property securing the mortgage, the outstanding mortgage principal as of January 1, 2016, and the mortgage origination date. Additionally, Form 1098 has increased in size from a 3-to-a-page to a 2-to-a-page format.
Below is a summary from the Form 1098's 2016 instructions on the additional requirements:
“What's New
Mortgage insurance premiums. Report mortgage insurance premiums paid of $600 or more in box 5. Reporting is required under section 6050H(h).
New reporting requirements. The Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 contains new reporting requirements for recipients of mortgage interest. For forms 1098 issued to payers after December 31, 2016, you must report the address or description of property securing the mortgage, the outstanding mortgage principal as of January 1, 2016, and the mortgage origination date.
Form resized. Due to the modification of reporting requirements by P.L. 114-41, sec. 2003, the official IRS Form 1098 has increased in size from a 3-to-a-page to a 2-to-a-page format, beginning with tax year 2016. The revised form can be found at www.irs.gov/form1098.”
The instructions for 2016 Form 1098 are available here. The revised form can be found here. Again, this is not for the 2015 tax year, but for any 1098 forms sent after December 31, 2016.
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Also, as a friendly reminder, NAFCU is currently offering an early registration savings of $200 for NAFCU’s 2016 Regulatory Compliance School—but it ends today! Use code HOLIDAY by today, January 8 to save. Take a look at the agenda.
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