Question: On a loan with two borrowers, we prepared a 1098 for the "primary" borrower only. Can the "secondary" borrower claim some/all of the interest paid without their name on the 1098? Or would we be required to do a new 1098 in their name?

Thanks.

Can?? The borrower can do anything they want, right or wrong.

As I understand the interest deduction limitations, IRS requires that the deduction is only valid if paid by the taxpayer and the taxpayer must be liable for the interest. So, one borrower can claim it all, or they can split it if the payment and liability are split.

The 1098 is used to verify deductions. If the entire amount is not claimed by your named payor, it could trigger an audit question. Providing a copy of the 1098 and an explanation (i.e. deduction claimed by co-borrower, not by borrower, or deduction split between borrowers) should resolve the question, if asked. Read "providing" as provided by taxpayer(s), not by the lender.

The lender is only required to issue one 1098.

Al

So then, if I am understanding you correctly, the Secondary borrower may claim all of the interest paid for the year, even though her name is not shown on the 1098, and, so long as the Primary borrower claims none of the interest paid for the year, without the bank (me) having to do an amended 1098 showing the Secondary borrower instead of the Primary...and, in the case of an audit, the taxpayer could provide a copy of the 1098 with an explanation that the Secondary borrower actually paid the interest for the year, thus claiming all of it on her taxes...does that sum it up?

Yes, mortgage interest is deductble because an obligor paid same, not because a 1098 was issued in their name.

This is common where 2 (or more) individuals own a home as tenants-in-common.

Al