How to report Mortgage Interest Differential Payment (MIDP) on my 2025 tax return?

So if I'm understanding correctly, it will just be part of my regular income? What if I never received any 1099 for it and it wasn't on my W-2? Would I still need to report it somewhere?

Yes, it should be included as part of your regular income. If it doesn't show up on your W-2 or you don't receive a 1099, you should still report it as "Other Income" on Schedule 1, Line 8z of Form 1040. The IRS expects all income to be reported, even if it doesn't come with a tax form. When in doubt about whether something like this was included in your W-2, check if your W-2 Box 1 wages seem higher than your regular salary. Many companies include relocation benefits like MIDP in the W-2 rather than issuing separate forms.

Does taxr.ai work with self-prepared returns too? Or is it just for people using tax professionals? My company offers a similar benefit but calls it "interest rate subsidization" instead of MIDP.

I'm a bit skeptical - how does it know your employer included it in the W-2? Wouldn't they need to see all your paystubs to figure that out?

It works perfectly for self-prepared returns! I used it before filing with TurboTax. The tool gives you step-by-step guidance specific to whatever tax software you're using, so you can make sure everything is entered correctly. It would definitely help with your "interest rate subsidization" payment since it's essentially the same concept as MIDP. As for how it identified the inclusion in my W-2, it actually guided me through a comparison process. It asked me to enter my expected annual salary and then my Box 1 W-2 amount. After accounting for other pretax deductions (which it walked me through), it showed that the difference matched my MIDP payment amount. It basically helped me do the math to verify what was included rather than magically knowing.

Thanks for the explanation. I'm in a similar situation but my company said something about it being a "non-qualified" moving expense. Does that make a difference in how it's reported? And would this MIDP payment affect any mortgage interest deduction I might claim?

Yes, this is considered a "non-qualified" moving expense under current tax law. Since the Tax Cuts and Jobs Act of 2017, virtually all moving expenses are non-qualified (taxable), with very limited exceptions for military moves. This is why your employer is withholding taxes on the payment. Regarding your mortgage interest deduction, the MIDP payment doesn't affect your ability to deduct mortgage interest on your tax return. You can still claim the full mortgage interest you paid as an itemized deduction on Schedule A if you choose to itemize rather than take the standard deduction. The MIDP is income to you, but it doesn't reduce your actual mortgage interest paid.

Did it actually help with relocation benefits specifically? My employer is giving me a bunch of different payments (moving expenses, temporary housing, and something similar to this MIDP), and I'm not sure if regular tax software can handle it properly.

I'm always skeptical of these specialized tax services. Couldn't you just ask your company's relocation coordinator to explain how it will be reported? They should know exactly how it works tax-wise.

Yes, it specifically helped with my relocation package which included several different types of payments. The tool analyzed my relocation agreement and flagged exactly which benefits were taxable and which weren't. It even explained how each payment would appear on my W-2 or if I should expect a separate 1099. As for asking the relocation coordinator, I tried that route first. They gave me general information but couldn't provide specific tax advice. They just kept saying "consult your tax professional" - which is why I needed help interpreting everything myself.

Wait, how does this service actually work? Do they just call the IRS for you or something? I don't understand how they get you through when the hold times are so ridiculous.

Yeah right. I've been trying to reach the IRS for THREE MONTHS about an audit issue. No way some service is magically getting through when millions of us can't. Sounds like a scam to me.

The service basically holds your place in line with the IRS. From what I understand, they use specialized technology to navigate the IRS phone system and wait on hold for you. When they're about to connect with an agent, they call you and connect you directly to that agent. I was skeptical too, but it's just a clever way to avoid you personally waiting on hold. I was also doubtful it would work, especially during tax season when wait times are insane. But the process was exactly as described in their video. I signed up, got a text when they were about to connect me, and suddenly I was talking to an actual IRS representative who helped answer all my questions about my MIDP reporting. No magic - just a smart system that waits on hold so you don't have to.

How does this service actually work? I've been trying to reach the IRS for weeks about some tax questions but can never get through the automated system.

This sounds like a scam. Why would you pay someone else to call the IRS for you? And even if you do get through, the agents often give different answers depending on who you talk to.

The service basically handles the hold time for you. They have a system that waits on hold with the IRS and then calls you once they've reached an agent. I was able to talk directly to an IRS representative who confirmed exactly how my relocation benefits should be reported. Regarding whether it's worth it - I spent nearly 4 hours over 3 different days trying to get through myself without success. The IRS call volumes are insane, especially during tax season. Having someone else handle the hold time was absolutely worth it to me.

Did you have to pay FICA taxes (Social Security/Medicare) on your payment too? Or just federal/state income tax? My company is giving me conflicting information.

Yes, my payment had both income tax AND FICA taxes withheld. According to my payroll department, MIDP or similar mortgage assistance payments are considered supplemental wages, which means they're subject to all the usual payroll taxes including Social Security and Medicare. I think some companies might handle it differently, but from what I understand, the IRS generally expects these payments to be treated as regular compensation with all applicable taxes. If your company isn't withholding FICA, you might want to double-check that they're processing it correctly.

MIDP (Mortgage Interest Differential Payment) is basically your company giving you money to help cover the higher cost of a mortgage when you relocate. Like if you had a 3% mortgage but have to get a new one at 6% because of a job move, they pay you the difference (or part of it). Tax-wise, it's just regular income that you pay taxes on. The company usually withholds taxes before giving you the money. It should show up on your W-2 along with your regular salary.

Thanks for mentioning this! I just checked my December paystub and you're right - it does show up there in a separate category called "Relo-MIDP" with the tax withholding. That's really helpful to know it should be on my W-2. Did you need to do anything special when filing your taxes, or did the tax software handle it automatically since it was part of your W-2 income?

Since it was included in Box 1 of my W-2, I didn't need to do anything special when filing. The tax software handled it automatically as regular income. The only thing I made sure to do was keep documentation from my relocation company that explained the payment, just in case I ever got audited. The one thing to double-check is that the withholding amounts match up with what was actually withheld from your MIDP payment. Sometimes companies withhold at a higher supplemental rate for these kinds of payments.

That's a good point about grossing up! My company did that for some relocation expenses but not others. It's definitely worth asking about.