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.

[msmith1199]

wny_pat wrote:

msmith1199 wrote:

wny_pat wrote:
After reading this thread, and the much throwing around the term "agent", makes me so glad that a retired, actual badge/credential carrying "IRS Criminal Investigation Special Agent" does my taxes.

You were with the IRS or your tax guys is a former IRS agent? I've worked with many of the Criminal Investigator guys and they are completely separate from the civil division that handles your taxes and tax forms. The criminal guys can't even look at your income tax forms without special permission from a Federal Judge through the US Attorney's Office. They can get a transcript easier, but not the actual return.

Note that I said he is retired. He worked both the civil and the criminal side before retiring.

I saw you said he was retired, I just couldn't figure out if you meant it was you, or this was somebody else. And if he worked on the civil side that's where he got his experience that allows him now to prepare taxes. The guys that work on the criminal side know less about taxes than I do. They have to go to H&R Block to get theirs done.

[DSDP_Don]

msmith1199.....You may have been putting the info on the wrong line for years and it wasn't noticed because they never kicked yours for a check. "wnytaxman" is giving you EXACTLY the information you need.

I've been audited for the same thing a couple of times regarding the RV. I now type on the appropriate Turbo Tax line... Wells Fargo, RV Loan, Loan #. Since I've been doing this, I haven't heard anything from them.

Don't forget, the IRS is not allowed to use common sense, they must apply their rules no matter how idiotic they may be. This is why it's difficult to explain something reasonably to them.

[wny_pat1]

msmith1199 wrote:

wny_pat wrote:
After reading this thread, and the much throwing around the term "agent", makes me so glad that a retired, actual badge/credential carrying "IRS Criminal Investigation Special Agent" does my taxes.

You were with the IRS or your tax guys is a former IRS agent? I've worked with many of the Criminal Investigator guys and they are completely separate from the civil division that handles your taxes and tax forms. The criminal guys can't even look at your income tax forms without special permission from a Federal Judge through the US Attorney's Office. They can get a transcript easier, but not the actual return.

Note that I said he is retired. He worked both the civil and the criminal side before retiring.

[doxiemom11]

I would have to look at where it's reported as I use turbo tax for my taxes. I'm sure it must put it in as interest the not 1098/99 was received for as it always asks questions like " is there any other interest you need to claim" - then when you would answer "yes" it would ask for an explanation of what the interest is for and I would select from the choices the most appropriate answer.

[msmith1199]

wny_pat wrote:
After reading this thread, and the much throwing around the term "agent", makes me so glad that a retired, actual badge/credential carrying "IRS Criminal Investigation Special Agent" does my taxes.

You were with the IRS or your tax guys is a former IRS agent? I've worked with many of the Criminal Investigator guys and they are completely separate from the civil division that handles your taxes and tax forms. The criminal guys can't even look at your income tax forms without special permission from a Federal Judge through the US Attorney's Office. They can get a transcript easier, but not the actual return.

[wny_pat1]

After reading this thread, and the much throwing around the term "agent", makes me so glad that a retired, actual badge/credential carrying "IRS Criminal Investigation Special Agent" does my taxes.

[msmith1199]

tyoungs wrote:
Same issue - same mistake, first time I claimed interest on RV I claimed it on the line for "mortgage interest" - letter from IRS said 1098's don't match. Sent them back reply that I had claimed on wrong line - should be on line that says interest with no 1098. Sent the explanation with copy of statement from bank showing interest was paid on RV, no problem. Now when I claim on correct line I mark it interest on RV.

I'm on my second RV and have been taking the deduction for quite a while now, and I don't recall ever putting them on a separate line. I remember totally up all my mortgage interest and putting it on one line. I think I just assumed the end of year statement served as a 1098 but I guess that was a bad assumption. In any event, 2011 was the first year they caught up to me. So I'll fix it for 2013, but I'm assuming I'll get the same letter when they catch up to 2012. Hopefully all the years before that they just let is slip by.

[tyoungs]

Same issue - same mistake, first time I claimed interest on RV I claimed it on the line for "mortgage interest" - letter from IRS said 1098's don't match. Sent them back reply that I had claimed on wrong line - should be on line that says interest with no 1098. Sent the explanation with copy of statement from bank showing interest was paid on RV, no problem. Now when I claim on correct line I mark it interest on RV.

[msmith1199]

doxiemom11 wrote:
We have our RV financed and also have never received a 1099 interest statement. We do own a house that is rented out, so we claim the house interest from the mortgage as expense on the rental property, we claim the interest for the motorhome as our primary residence. So far no problem even though we do not receive the 1099.

Do you report the interest on the line on Schedule A that says interest that you did not receive a 1098 for? Sounds like that is probably where my problem may have started.

[doxiemom11]

We have our RV financed and also have never received a 1099 interest statement. We do own a house that is rented out, so we claim the house interest from the mortgage as expense on the rental property, we claim the interest for the motorhome as our primary residence. So far no problem even though we do not receive the 1099.

[wnytaxman]

msmith1199 wrote:

wnytaxman wrote:
The IRS agent who looked at your response may not realize that your RV qualifies as a second home. That may be why they tried to disallow the deduction. Again, try a phone call in the morning and you may find that the situation will be resolved.

In my letter of explanation I used the language right off their website about having living quarters, but you may be right because I didn't tell them it was their own rules.

Many of the IRS inquiries that are mailed out are done by computer as are many of the replies that are sent out. As such they may not make much sense to normal human beings. Try the phone and be patient while you are waiting.

Good Luck!

[Community Alumni]

msmith1199 wrote:

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.

You have hit the nail on the head with the statement about the wrong line. I did the same with the same bank and got the same letter from IRS but as I remember the copy of the letter from the bank was all that was needed. The following year I used the correct line and all is good, so far I hope.
Also good luck with Wells Fargo sending a 1098 form

JimR

[AllegroD]

After reading back through this, I would agree with getting someone on the phone or in person. Sounds like you have the right forms but either the person reviewing is not knowledgeable or they are looking at it as a third as you said yo had unimproved property, which they may not understand that it is unimproved.

[msmith1199]

wnytaxman wrote:
The IRS agent who looked at your response may not realize that your RV qualifies as a second home. That may be why they tried to disallow the deduction. Again, try a phone call in the morning and you may find that the situation will be resolved.

In my letter of explanation I used the language right off their website about having living quarters, but you may be right because I didn't tell them it was their own rules.

[wnytaxman]

The IRS agent who looked at your response may not realize that your RV qualifies as a second home. That may be why they tried to disallow the deduction. Again, try a phone call in the morning and you may find that the situation will be resolved.