1) Q: I know I paid mortgage interest, but I did not receive a 1098. How should I go about figuring how much I can deduct?

A: In this situation the first thing to do is to try to contact the institution where the interest was earned and ask them to issue or re-issue the 1098. If that is not possible, calculate the interest paid based on the statements that were issued or based on your own records.

Example: A taxpayer makes monthly payments of $2,000 on her house but can not find the 1098 stating how much interest was paid. The taxpayer contacts the lender and asks for a copy of the 1098 so she will have the exact amount to report.

2) Q: Is there a limitation on the amount of deductible mortgage interest?

A: Mortgage interest can be taken on a home loan as long as the loan is under $1,000,000. Interest on loan amounts over $1,000,000 would be excluded.

Example: A taxpayer buys a $3,500,000 home. The taxpayer finances $2,000,000 through a mortgage secured on the house and makes interest payments of $100,000 over the course of the year. $50,000 of the interest is allocable to the loan amount under $1,000,000 and is tax deductible. The other $50,000 of the interest is not tax deductible.