Loan Management Made Simple for QuickBooks®
Form 1098. Loan Assistant.
Form 1098 is designed to provide the IRS with information regarding the amount of interest and loan-related expenses that are paid on a loan over the course of the tax year. The information required to be filed includes any interest amount received from borrowers, any points charged at loan closing, and many other loan related charges. In many instances, the borrowers can deduct these expenses to reduce the amount of their taxable income.. Lenders are required to provide borrowers with copies B and C of Form 1098 and are responsible for correct information provided to borrowers. Most borrowers are unable to complete filing their personal and business tax returns until they receive these forms. It is a good business practice to distribute required forms to borrowers as soon as it is practical and before the official deadline. This will make your borrowers less anxious in the busy tax season and will save you time from answering their phone calls asking for the information you have to provide them anyway. In addition, the lenders must file Form 1096 along with copies A of Form 1098 with the IRS.
The IRS can assess significant penalties for not complying with the Form 1098 filing rules. A lender can be charged with a maximum penalty of $100 per information return document with missing or incorrect information, up to a maximum of $1,500,000 per year. The maximum penalty is $500,000 per year for a small business, which is defined as a business that had gross receipts of $5,000,000 or less for the three most recent tax years (or time in business, if shorter) ending before the calendar year the information returns were due.
It can be quite overwhelming to deal with preparation and filing of Form 109 if you need to collect all required data and enter it manually. Having a dedicated software package that generates the Forms 1098 can be helpful, but double entry process increases room for errors and potential responsibility. Loan Assistant allows lenders to automatically produce Forms 1098 and a draft of Form 1096 directly from the loan program and avoid the extra steps involved in compiling data and entering it in the forms manually. Having this convenient tool in Loan Assistant is just one more incredible feature of the loan software that helps simplify the work of lenders by automating loan payment processing.