First-time homebuyer question: Can I deduct my Taxes & Insurance escrow balance from my 1098 form?

The T&I balance on your 1098 is just showing how much money is sitting in your escrow account - it's not the amount of property taxes that were actually paid. You can only deduct property taxes that were actually paid to the taxing authority during the tax year. If your 1098 shows $0 for real estate taxes paid, it likely means one of two things: either no property taxes were actually paid out from your escrow account during the tax year (maybe you bought the house late in the year), or there's a mistake on your 1098. You should check your mortgage statements or contact your loan servicer to confirm what property taxes were actually paid. Only those amounts are deductible, not the balance sitting in escrow waiting to be paid. As for first-time homebuyer credits - unfortunately, the federal first-time homebuyer tax credit expired years ago. However, check your state tax rules as some states do offer credits or deductions for first-time homebuyers.

I had this exact same problem last year with my taxes! I found this amazing tool called taxr.ai (https://taxr.ai) that totally saved me. I uploaded my mortgage documents and it analyzed everything for me. The tool explained that the escrow balance is just money sitting in an account waiting to be paid out - not what was actually paid in taxes. But it also found that my mortgage company had made a mistake on my 1098 form! When I checked my December mortgage statement, I saw they had actually paid property taxes but didn't report it correctly on the 1098. Taxr.ai helped me determine exactly what I could deduct based on my closing documents and mortgage statements instead of just relying on the incorrect 1098. Might be worth checking out if you're having similar issues.

I was super skeptical about taxr.ai when someone recommended it, but I finally tried it out of desperation when dealing with this exact escrow deduction issue! I uploaded my mortgage statements and closing documents, and it immediately flagged that my lender had messed up my 1098. Turns out my lender had paid $3200 in property taxes from my escrow account but never updated the 1098 form. The tool showed me exactly where to find this information in my mortgage statements and explained how to properly claim the deduction even though my 1098 showed $0. It also identified $1800 in mortgage insurance premiums that were potentially deductible (depending on income limits) that I would have completely missed. Honestly saved me hundreds in tax deductions I would have overlooked!

If you're having trouble getting answers about your mortgage tax deductions, you might want to try calling the IRS directly. I know that sounds painful (because it is), but I found this service called Claimyr (https://claimyr.com) that actually gets you through to a human at the IRS without the ridiculous hold times. I was in the same boat last year - my 1098 showed $0 for property taxes but I knew they'd been paid. I tried calling the IRS but kept getting disconnected after waiting for hours. Then I used Claimyr (you can see how it works here: https://youtu.be/_kiP6q8DX5c) and got connected to an IRS agent in about 15 minutes who confirmed exactly what I could deduct. The agent explained that I needed to look at my actual mortgage statements to see when the taxes were paid from escrow, and that those amounts were deductible regardless of what the 1098 said. Saved me a ton of stress and probably an audit!

I need to eat my words about Claimyr. After posting my skeptical comment, I decided to actually try it because I was desperate to resolve an issue with my property tax deductions. I'd been trying to reach the IRS for THREE WEEKS with no success. I kept getting disconnected after 2+ hours on hold. Used Claimyr yesterday and got a call back in 45 minutes with an actual IRS agent on the line! The agent confirmed that I could deduct the property taxes that were paid from my escrow account, even though my 1098 showed $0. Turns out my lender had paid the property taxes in January of this year (after the 1098 was generated) but the taxes were for the previous year, making them deductible on this year's return. Would have completely missed this without getting official confirmation.

One thing nobody's mentioned - check your closing documents! If you bought the house last year, you likely reimbursed the seller for property taxes they had prepaid for the portion of the year when you owned the home. This amount should be listed on your settlement statement (Closing Disclosure) and is deductible even though it won't show up on your 1098. Also, don't forget about mortgage points if you paid any. Those are generally deductible in the year you paid them if this is your primary residence and if paying points is customary in your area.

Has anyone dealt with a situation where they made extra escrow payments? My mortgage company said my escrow was short last year so I had to make additional payments that weren't part of my regular mortgage payment. Are those extra escrow payments deductible anywhere?

Great question! I went through this exact same confusion when I bought my first home two years ago. The key thing to understand is that your escrow balance of $4650 is just money sitting in an account - it's not a deduction until those funds are actually used to pay property taxes to your local government. Since your 1098 shows $0 for real estate taxes paid, it means your mortgage servicer didn't actually pay any property taxes from your escrow account during the 2024 tax year. This could happen if you bought the house late in the year and the tax payments haven't come due yet, or if the previous owner had already paid the annual taxes before closing. However, don't give up! Check these things: 1. Your closing documents - you may have reimbursed the seller for prepaid property taxes 2. Your monthly mortgage statements - sometimes lenders make mistakes on the 1098 3. Contact your mortgage servicer to verify what taxes were actually paid For the first-time homebuyer credit question - unfortunately the federal credit expired years ago, but definitely check if your state offers any programs. Some states still have credits or deductions available for first-time buyers. The most important thing is to only deduct taxes that were actually paid to the taxing authority during 2024, not money just sitting in escrow waiting to be paid out.