IRS and the Interest Deduction

[msmith1199]

Anybody else having issues with the IRS on the mortgage interest deduction for the motorhome as a second home? My motorhome is financed through Wells Fargo Bank. For the entire life of the loan they have never sent me a 1098 for the Interest. I just get an end of year statement with the total interest paid, and I take the deduction. A couple of months ago I got a letter from the IRS with a bill and an explanation that the 1098's that were reported to them for mortgage interest do not match the amount I reported. They said to send in a written explanation if I didn't agree.

So I prepared the written explanation and attached a copy of my end of year statement and sent it all in. Well today I get the same letter saying based on my response I still owe them $1100. They say the documents I sent don't support the deduction.

Anybody else have this problem? Does your lender send you a 1098 for mortgage interest on the motorhome?

On Edit: I should have said form 1098 and not 1099 so I changed them.

[country_sunflow]

Old Biscuit is right on, Worked as tax preparer for 25 years and he knows what form is what, and also there are no 1099/1098 forms. Contact the tax advocate and they will help. I don't see a problem that can't be resolved in your favor.

[wnytaxman]

WOW, what an interesting read of wrong information. First off a bank does not issue a 1098 for an RV Loan. In fact, they are required to NOT issue a 1098 on what is a vehicle loan. It is not up to the bank to determine if your RV qualifies as a second home by having kitchen and bathroom facilities. Therefore there will NOT be any 1098 issued for an RV Loan.

The OP's goof was reporting his RV interest on the home mortgage interest line rather than the other interest line of Schedule A with the notation RV Loan. The home mortgage line can not be more than the total of the 1098's received by the IRS or you will hear from them.

What to do now? Call Monday morning early. The earlier you call, the less time you will spend on hold. Be patient and explain your situation and the odds are very good that your problem will be resolved. If you used a qualified tax preparer, you could also have them contact the IRS if they are listed as a third party designee on your return. You shouldn't owe the IRS anything, but you will have some hoops to jump through.

[msmith1199]

2oldman wrote:
Did you file on paper ? Sounds like it. You can get away with much more if you file online. The IRS loves that.

I filed online. You don't even send in the 1098's when you file online. This is probably why the computer kicked it out since it sounds like most lenders are not giving 1098's on RV loans. It also looks like there may have been a mistake on my return since there is a separate line on the schedule A for reporting mortgage interest that you did not received a 1098 for. The instructions for schedule A say to report that on a different line and you are also supposed to include a written explanation as to why you didn't get a 1098. I don't recall Turbo Tax covering that although it may have and I just missed it. I'll pay attention this year when I file my taxes. One problem is when you use Turbo Tax and file online, you can't attach supporting documents or written explanations.

Sounds like this may be good info for anybody writing off your RV loan interest as a second home. Make sure you follow the instructions in Schedule A if you don't get a 1098. I'm also going to contact Wells Fargo and see if I can convince them to send me a 1098 for this year and future years. I know I filled out my 2012 taxes the same as my 2011 taxes so when they catch up with 2012 I imagine I'm going to get the same letter from the IRS.

[2oldman]

Did you file on paper ? Sounds like it. You can get away with much more if you file online. The IRS loves that.

[The_Shadow_Nos]

Yes that was the reason for the audit the interest I claimed for the motorhome.

[J-Rooster]

2bzy2c wrote:
First off, the document he needs is the 1098. The 1099-int is for interest income received by him. In this case the 1098 reports interest paid by him.

The lender is required to furnish a 1098 to the tax payer by law and report the interest received by the lender in this case.

All he has to do is call the lender and request a copy of the 1098. Easy.

I agree with this post! And for Wells Fargo finance the loan for life? I can't tell you the number of loans on RV's that I've had since 1976 that were sold to another lending company by the original lender.

[msmith1199]

snowfitter wrote:
The IRS sent me the same letter saying I owed them $1150.00 for 2011 saying they did not receive the tax form from the bank. My bank is Bank One. I call the bank and they faxed me my statement from 2011 showing the amount of interest I payed for the year. I faxed this statement to the IRS and 2 weeks later they sent a letter saying they received it and would let me know in 30 days. 2 weeks ago they sent me a letter saying I no longer owed them any money and everything was fine. There were 2 other where I work that also got the letters so I think the IRS sent thousands of letters to people fishing for more money.

Humm...I handled it exactly like you did except my second letter back from the IRS said the documentation wasn't good enough. I'll try and see if I can get a hold of a live person tomorrow and see if they can figure out what the problem is.

[PawPaw_n_Gram]

snowfitter wrote:
I think the IRS sent thousands of letters to people fishing for more money.

Maybe.

The second home interest deduction is one of the top three frauds according to some articles I've seen. As many as 2/3 of the returns which claim a second home/vacation home are not real.

Some families have been hit because six or seven people claim the interest deduction for the same vacation home.

Claiming interest deduction for a second home is one of several items which flags a tax return for additional scrutiny.

[2bzy2c]

The Shadow Nos wrote:
We got audited a few years ago no 1099. All we did was to have the bank write a letter telling what the loan was for and sent it back, 6 months later got letter back saying I was good.

No. I did not mean to imply that. It could very well be the taxpayer may
Have overlooked the 1098. B of A's 1098 look very similar to their bank
Statements. That happened to me

[RVUSA]

snowfitter wrote:
The IRS sent me the same letter saying I owed them $1150.00 for 2011 saying they did not receive the tax form from the bank. My bank is Bank One. I call the bank and they faxed me my statement from 2011 showing the amount of interest I payed for the year. I faxed this statement to the IRS and 2 weeks later they sent a letter saying they received it and would let me know in 30 days. 2 weeks ago they sent me a letter saying I no longer owed them any money and everything was fine. There were 2 other where I work that also got the letters so I think the IRS sent thousands of letters to people fishing for more money.

Thats the easy path. Depending on the bank, they can tell you that they only report the info at the end of the year and they wont give you anything else.

I'm well versed in this one as it was a sticking point twice with the IRS over a boat of mine. The first time it was resolved by audit, the second time I went directly to the local office and they cleared it up in a matter of minutes.

[Sully2]

msmith1199 wrote:

So you mean Wells Fargo, one of the biggest and oldest banks in the Country, is breaking the law?

They are required by law to "provide" you one...but NOT to mail it to you!!!!

I got into it with a Bldg & Loan over that little matter many years ago. I had to drive to their office where they were more than happy to HAND ME ONE.

The next year ( after having been with them for 3 years) I refinanced my home load with someone else...:B

[RVUSA]

msmith1199 wrote:

2bzy2c wrote:
First off, the document he needs is the 1098. The 1099-int is for interest income received by him. In this case the 1098 reports interest paid by him.

The lender is required to furnish a 1098 to the tax payer by law and report the interest received by the lender in this case.

All he has to do is call the lender and request a copy of the 1098. Easy.

So you mean Wells Fargo, one of the biggest and oldest banks in the Country, is breaking the law?

They dont have to send one if they dont want too.

The OP needs to sit down face to face with an IRS agent and show them how he determined the interest he reported. If Wells Fargo didnt send in one for the rv, and theres plenty of lenders that dont, then that is what the IRS is griping about. He's "over claiming" in their eyes, and he has to prove he's not.

[snowfitter]

The IRS sent me the same letter saying I owed them $1150.00 for 2011 saying they did not receive the tax form from the bank. My bank is Bank One. I call the bank and they faxed me my statement from 2011 showing the amount of interest I payed for the year. I faxed this statement to the IRS and 2 weeks later they sent a letter saying they received it and would let me know in 30 days. 2 weeks ago they sent me a letter saying I no longer owed them any money and everything was fine. There were 2 other where I work that also got the letters so I think the IRS sent thousands of letters to people fishing for more money.

[msmith1199]

The Shadow Nos wrote:
We got audited a few years ago no 1099. All we did was to have the bank write a letter telling what the loan was for and sent it back, 6 months later got letter back saying I was good.

Was that the reason for the audit, or was that just something that was found in the audit?

[The_Shadow_Nos]

We got audited a few years ago no 1099. All we did was to have the bank write a letter telling what the loan was for and sent it back, 6 months later got letter back saying I was good.