We don't tailor make tax forms to suit you

[bankworking]

Customer refinances her 2nd mortgage with me back end of February last year.

Her existing second mortgage of just over $30,000 has a 12.5% APR
Simplified math: that's about just over $300 a month of interest she's paying at the moment


We don't find enough equity in her house to do a straight refinance, but at that high of interest rate, I can save her money regardless. End up putting $15,000 on a 5% APR home equity, and the remainder on a 8% APR personal loan. For the same payment term, she's paying less than $60 a month interest on the home loan over the 10 months she has it with us for 2017 (important!) and approximately $100 a month interest on the personal loan.



And now she's mad.
Absolutely insanely upset.

Because lenders don't have to send a 1098 mortgage interest tax statement if they charged you less than $600 in interest over the year.


So, her old second mortgage, they sent her a 1098 tax statement (because the charged her over $600 in interest in the 2 months of the year she was with them) and we did not (because the home equity portion of the loan charged less than $600 in interest over the ten months).


And I spent waaaay too long explaining that:
1) I am not a tax advisor
2) we do not prepare mortgage interest statements for personal loans, so the personal loan interest will not get a tax form
3) we will not prepare a mortgage interest statement for her home loan because we charged her less than $600 in interest over the year, but she is welcome to take the December statement to her tax advisor to show the amount of year-to date interest she did pay
4) the cost of her appraisal back in February does not get added onto the 1098. It is not interest.
5) I don't know what your first mortgage did with points; I am not a tax advisor and I do not work in 1st mortgages. I can tell you what goes on the home equity 1098 tax statement and that is ALL. And the appraisal fee does NOT go on.
6) no your personal loan interest does not go into the tax form either.
7) yes I very much DID explain to you that we couldn't pay off your home loan entirely with a home loan and that the rest could go onto a personal loan
8) no I did not promise that everything would be tax deductible. Lady, I don't even promise things I KNOW, tax wise because I am not a tax advisor, but I know enough to know that home equity interest is a great big IF... I especially wouldn't promise YOU anything because I still remember you from a year ago, and two minutes in I knew better than to be the slightest bit unclear on ANYTHING
9) no, we are not going to go out of our way to prepare a tax form just for her when it does not meet the $600 threshold (though I did check, just in case, and was given an absolutely no exceptions response)
10) NO we are not going to add interest that is not on a home loan and your appraisal fee in so you can have your desired tax form


Sure, I can read out to you the amount of interest you paid out each month on each loan (which I did), but that makes no difference to any of the above.


And by the way, Lady, no matter how many times you try to correct me, it is a 1098, NOT a 1099.

[Gerrinson]

That's some real thanks for saving her a ton of money, eh?

[Shyla]

If you can’t do your taxes, get advice. Don’t call and yell at random people who aren’t tax experts. I suspect she’ll get it very, very wrong.

[morgana]

Yeah, the IRS is twirling its collective mustache as we speak . . .

[Slave to the Phone]

Tax season, the most magical time of the year. Usually, we are so incompetent that we are lucky to have spelled our client's name right, but tax time is when we can work magic and reprint the health insurance tax form to show that they have had insurance all year long to avoid the rather steep fines.

After explaining that changing the form would be fraud which the IRS folks tend to frown upon, and that we can't actually print out a copy of their correct form in the office and are only able to have another one sent to their mailing address, we are back to incompetent, but for those few glorious minutes? Its heaven.

[MoonCat]

Sounds like she thought she'd be getting some kind of big deduction and therefore either getting a much larger refund back, or paying out less in taxes overall - and is not pleased to discover that she was wrong about that.

[sstabeler]

to be fair, the loss of the tax deduction- I assume it's lost, since she can't prove it if audited- means she would need to pay $540 more tax by my calculations- which means she saved $100 per year overall, which could be somewhat disappointing.

Assuming you explained that the personal loan wouldn't be tax-deductible, though, it's still her own fault, not youra.

[taxguykarl]

9) no, we are not going to go out of our way to prepare a tax form just for her when it does not meet the $600 threshold (though I did check, just in case, and was given an absolutely no exceptions response)....
And by the way, Lady, no matter how many times you try to correct me, it is a 1098, NOT a 1099.

While regulations don't require a 1098 for less than $600, she can still claim the deduction based on a year-end statement. I have had to rely on those for clients who managed to pay down their mortgages and student loans to the point where they have less than $600 in interest payments.

[bankworking]

While regulations don't require a 1098 for less than $600, she can still claim the deduction based on a year-end statement. I have had to rely on those for clients who managed to pay down their mortgages and student loans to the point where they have less than $600 in interest payments.

Which is why I told her to use her December statement, which shows the year-to-date total. Which she refused to believe would work.

Of course, she still won't get a deduction for the personal loan interest or the appraisal fee.