I am just completing my 2014 Returns. I get a 1098 (Mortgage Interest Paid) on my parents home. I qualified for the mortgage for them and they legally own and pay all mortgage payments on the property.Because I'm the borrower on the bank loan, the 1098 comes to me. My parents use the 1098 as a deduction, since they can paper-trail that they make ALL the payments (beneficial owners)How do I account for it on my return, being that the IRS and State see that a 1098 was issued to me and will question how my gross income suffices to pay such an expense mortgage? ========= in general, you’re not allowed to claim the mortgage interest deduction for someone else’s debt. They re legal owners of the home and pay the entire mortgage,they can claim the full amount of mortgage interest if they itemize on Sch A .Your parents must have an ownership interest in the home to deduct interest on a home loan. This means that their names/ name have to be on the deed or they have a written agreement with the deed holder(s) that establishes they have an ownership interest. For example, a parent who buys a home for a child that is in the child's name alone cannot deduct mortgage interest paid on the child's behalf, as they do not own the home.
you said your parents legally own and pay all mortgage payments on the property, then, they can deduct the interest expenses aslongas they are responsible for the payments.
Note; The IRS allows only the actual owners of a property to claim tax deductions for that property. For example, someone else besides you could be paying your mortgage and property taxes but won't be able to claim deductions for those payments. Property ownership deductions also stay with property owners even when they don't reside on or live in those properties.
My income does not support that of the 1098 figure. If I leave it off of my return all-together, would this be the correct method of handling such a scenario?=======>>>>>>>Correct ; you can not deduct the mortgage interest expenses paid by your parents who are responsible for the mortgage payments. In order to claim the mortgage interest deduction, you must have an ownership interest in a qualified property and be responsible for a secured debt.To deduct mortgage interest expenses, your parents necessarily need to itemize deductions on Sch A of 1040, if not then no they can’t.