Community Forums

scep · 01-01-2016, 06:41 PM

Quote:

Originally Posted by Dutch Star Don

Here is something I find interesting. The IRS has attached or associated your social security number to just about everything that is used in your tax return. You can still fudge on charitable donations (which has been tightened up) and on medical bills, but you need a large number to get past the percentage of your AGI to make any difference.

Now here is what's interesting and I'm not suggesting it be done, but you can easily deduct $5K-$10K a year with a bogus RV loan. The IRS doesn't require any documentation. For three years in a row I was questioned about the deduction for my RV. I always wondered why the IRS didn't require the lender to send an interest statement. In the last few years, I've been typing out the words "RV loan" with an account number on my return. I haven't been questioned since. It just surprises me that they haven't tightened this section up.

you are a walking audit target.

Just because you arent aware of something (or the irs doesnt ping you for something) doesnt mean it doesnt exist. It just means you havent dealt with it yet.

And unfortunately for you, the problem is compounded by multi year cheating. interest, penalties, fraud...

think and research form 1098. All the irs has to say is produce it, and if you cant you are toast.

bulldog2 · 01-01-2016, 06:45 PM

its the same as a home ,or boat loan ,,,it really says that if you can eat on it cook on it sleep on it take a dump on it its a vacation home

wnytaxman · 01-01-2016, 06:53 PM

Quote:

Originally Posted by scep

you are a walking audit target.

Just because you arent aware of something (or the irs doesnt ping you for something) doesnt mean it doesnt exist. It just means you havent dealt with it yet.

And unfortunately for you, the problem is compounded by multi year cheating. interest, penalties, fraud...

think and research form 1098. All the irs has to say is produce it, and if you cant you are toast.

We have seen more than a few people over the years who have the attitude that anything is deductible as long as you don't get audited. Considering the audit rate is very low, the odds are with those that get creative. I hate to admit that, but it is a fact of life. However, there are more computer checks done on returns than most would imagine. Things like the percentage of income devoted to interest, contributions, and other deductions. Yes, face to face audits are down, but computer checking is up and up a lot.

One point that does need to be cleared up is the use of form 1098. That form is used to report real property mortgage interest, not RV interest. At this point in time there is no reporting of RV interest to the government. That may or may not change at some point in the future, but as of right now it would be unusual for anyone to receive a 1098 on mortgage interest for an RV loan.

Old Scout · 01-01-2016, 06:53 PM

OK--I deducted RV loan interest for many years with no problem. Early on, I would get a nasty letter from the IRS saying I owed more tax. Each year I would produce the loan documents on the RV and the IRS would go away--until next year. I finally realized that I was checking the "1098 Provided" block on my tax form so the IRS was looking for one--duh....The catch was that the big bank that held the loan didnt recognize it as deductable so no 1098--double duh!!! After no help from the bank despite repeated request for a 1098, I stopped checking the box on the tax form--guess what, no more nasty letters.
PS--think the larger challenges for RV owners are for those who claim out-of-state residence; or those who claim work-related and deduct depreciation--good luck keeping those going!
[Where is Lois Learner when we really need her?]

scep · 01-01-2016, 07:03 PM

Quote:

Originally Posted by wnytaxman

One point that does need to be cleared up is the use of form 1098. That form is used to report real property mortgage interest, not RV interest. At this point in time there is no reporting of RV interest to the government. That may or may not change at some point in the future, but as of right now it would be unusual for anyone to receive a 1098 on mortgage interest for an RV loan.

Form 1098 is still in use and active for 2016. Whether a bank files it (and a copy to you) for your benefit is debatable, but if the irs demands proof for the deduction, you can only provide proof of interest paid by form 1098 and the bank MUST be the issuer.

Been there done that.

FlyingDiver · 01-01-2016, 07:06 PM

Quote:

Originally Posted by scep

Form 1098 is still in use and active for 2016. Whether a bank files it (and a copy to you) for your benefit is debatable, but if the irs demands proof for the deduction, you can only provide proof of interest paid by form 1098 and the bank MUST be the issuer.

Been there done that.

Not true for non-real-property loans, such as RV or boat. Most banks will not issue a 1098 for those loans, and there's no requirement that they do so.

There's a line on Schedule A specifically for deductible home loans NOT documented with a 1098.

scep · 01-01-2016, 07:09 PM

Quote:

Originally Posted by FlyingDiver

Not true for non-real-property loans, such as RV or boat. Most banks will not issue a 1098 for those loans, and there's no requirement that they do so.

There's a line on Schedule A specifically for deductible home loans NOT documented with a 1098.

Have you been audited? I have and I can state with absolute authority that the irs can demand a 1098 to prove interest paid. And I can also state that once my bank saw the letter from the irs they were more than happy to issue me one for that audit.

wnytaxman · 01-01-2016, 07:09 PM

Quote:

Originally Posted by scep

Form 1098 is still in use and active for 2016. Whether a bank files it (and a copy to you) for your benefit is debatable, but if the irs demands proof for the deduction, you can only provide proof of interest paid by form 1098 and the bank MUST be the issuer.

Been there done that.

Sorry, but 1098 is for REAL PROPERTY MORTGAGE interest not personal property. An RV is personal property as is an auto or truck. A bank does not provide a 1098 for personal property loan interest. Usually the lender will provide the interest amount in letter form, not on a 1098 for RV loan interest. This is all the documentation needed for the IRS.

scep · 01-01-2016, 07:11 PM

Quote:

Originally Posted by wnytaxman

Sorry, but 1098 is for REAL PROPERTY MORTGAGE interest not personal property. An RV is personal property as is an auto or truck. A bank does not provide a 1098 for personal property loan interest. Usually the lender will provide the interest amount in letter form, not on a 1098 for RV loan interest. This is all the documentation needed for the IRS.

see my post above. last years audit included the demand for a 1098 and it was provided.

Cant help what you guys think, but you and the irs are definitely not on the same page. And unfortunately for the rest of us, they rule.

wnytaxman · 01-01-2016, 07:17 PM

Quote:

Originally Posted by scep

see my post above. last years audit included the demand for a 1098 and it was provided.

Cant help what you guys think, but you and the irs are definitely not on the same page. And unfortunately for the rest of us, they rule.

I'm a practicing CPA with my own practice and I deal with the IRS on a very regular basis. I also teach taxation to other CPA's for required mandatory continuing professional education classes which I have taught for over 21 years. I can fairly safely say that I do know what I'm talking about in regards to taxation matters. If your bank did in fact issue you a 1098 for RV interest, they did so in error. The IRS will accept a letter from the lending institution verifying the interest paid on an RV loan and a 1098 is not required.

scep · 01-01-2016, 07:20 PM

I will add, that the bank is not required to file a 1098, but we consumers are still required to prove our deductions when asked to, and as of last year that proof in my case was only allowed with a 1098.

There now the double speak will let everyone off the hook.

FlyingDiver · 01-01-2016, 07:21 PM

Quote:

Originally Posted by scep

I will add, that the bank is not required to file a 1098, but we consumers are still required to prove our deductions when asked to, and as of last year that proof in my case was only allowed with a 1098.

Sounds like the IRS clerk you were dealing with didn't know what he was doing. Probably new at the job.

scep · 01-01-2016, 07:25 PM

Quote:

Originally Posted by wnytaxman

I'm a practicing CPA with my own practice and I deal with the IRS on a very regular basis. I also teach taxation to other CPA's for required mandatory continuing professional education classes which I have taught for over 21 years. I can fairly safely say that I do know what I'm talking about in regards to taxation matters. If your bank did in fact issue you a 1098 for RV interest, they did so in error. The IRS will accept a letter from the lending institution verifying the interest paid on an RV loan and a 1098 is not required.

Great, I'm very happy for you. But you werent audited and you werent demanded to provide proof of interest, I was. The letter was very clear, it said a 1098 must be provided or the interest would not be allowed.

As a CPA I am sure you wont try and practice law by stating the bank was in error by providing me one. Well maybe not, but just the same They did because they can and they did.

wnytaxman · 01-01-2016, 07:26 PM

Just to clarify, the instructions to the IRS form 1098 states that it is used to report mortgage interest paid. It later defines mortgage interest as interest paid on a real property loan. So you must have had a very, very uninformed agent and a bank equally as uninformed.