My 1098 form shows incorrect mortgage principal amount - should I request correction?

Tax professional here. This is actually more common than you might think! The important thing to understand is that the 1098 form reports two key pieces of information: mortgage interest paid (Box 1) and outstanding mortgage principal (Box 2). For tax purposes, the IRS is primarily concerned with the interest amount since that's what you're deducting. The principal balance is informational and doesn't directly impact your tax calculation. However, it's still best practice to have accurate documentation. I recommend taking a screenshot of the correct balance from your online account and keeping it with your tax records. Then call your mortgage servicer and request a corrected 1098. Most have a process for this. If they refuse or make it too difficult, document your attempt (date, time, who you spoke with) and keep that with your records too. If the interest amount is correct, you can file your taxes using the correct information while you wait for the corrected form. Just make sure to keep documentation of the discrepancy.

After seeing so many posts about mortgage statement errors, I finally created an account to share my experience. I was in a similar situation last year with my 1098 showing incorrect principal (off by about $5k). I tried calling my servicer and got nowhere fast. Then I discovered taxr.ai (https://taxr.ai) which was a game-changer. I uploaded my incorrect 1098 and my mortgage statements, and their system flagged the discrepancy automatically. They provided a detailed report explaining exactly what was wrong and why it happened (turns out my servicer had applied an escrow adjustment incorrectly). I used their documentation when I called my servicer again, and this time they immediately understood the issue and sent a corrected 1098. The whole process was so much easier than trying to explain the problem myself.

Okay, I need to admit I was wrong in my skeptical comment above. I decided to try taxr.ai after continuing to get nowhere with my mortgage servicer about a similar issue. The service actually identified that my servicer had been applying my extra principal payments incorrectly for MONTHS, which explained why my 1098 was so far off. The report showed exactly which payments were misapplied and when. When I called my servicer armed with this information, they finally took me seriously and fixed both the accounting error and issued a corrected 1098. I probably could have figured it out eventually on my own, but it would have taken days of combing through statements. The service saved me countless hours and frustration.

I had almost the exact same issue last year! After three phone calls and being transferred between departments multiple times, I still couldn't get my mortgage company to issue a corrected 1098. I was about to give up when a friend recommended Claimyr (https://claimyr.com). I was skeptical, but I watched their demo video (https://youtu.be/_kiP6q8DX5c) and decided to give it a shot. They got me connected to an actual human at my mortgage servicer in about 15 minutes instead of the 2+ hours I had been waiting on previous calls. The agent I spoke with was able to see the discrepancy right away and initiated the process for a corrected 1098. Having a direct line to a real person made all the difference - they even followed up with an email confirming the correction was being processed.

I need to eat my words from my skeptical comment above. After another frustrating 90+ minute hold with my mortgage company that ended with a disconnection, I decided to try Claimyr out of desperation. I was connected to an actual human at my mortgage servicer in about 20 minutes without having to listen to a single second of hold music or press a single menu option. The rep I spoke with was able to research my 1098 issue, confirm there was an error, and start the correction process. I'm still shocked it worked so well. For anyone dealing with these frustrating mortgage servicer phone systems, this is absolutely worth it just for the time saved. Never thought I'd be recommending a service I called "BS marketing" but here we are.

An important point nobody has mentioned: if you itemize deductions and claim mortgage interest, having an incorrect principal amount on your 1098 could potentially cause issues if you're ever audited, especially if you're near the limits for qualified residence loans. For tax year 2025, you can only deduct interest on up to $750,000 of qualified residence loans (or $375,000 if married filing separately). If your reported principal is artificially high, it might appear that you're deducting interest on debt above these limits. I'd definitely recommend getting it corrected, or at minimum, keeping detailed documentation showing the correct amounts. The IRS has been increasing audit rates for higher income taxpayers, so accuracy in mortgage documents is becoming more important.

I'm actually a mortgage servicer employee (not naming the company for obvious reasons). These principal balance errors usually happen for one of three reasons: 1. Timing issues - the balance cutoff date for the 1098 might be different from what you're seeing online 2. Misapplied payments - extra principal payments sometimes get applied incorrectly 3. System synchronization errors - our customer-facing website sometimes pulls from a different database than our tax document system Definitely request a corrected 1098. Call and specifically ask for the "Tax Documentation Department" rather than general customer service. Most servicers have a dedicated team for tax forms that can help much faster. Also, if you've made extra principal payments during the year, specifically mention that when you call. That's the most common cause of these discrepancies and helps us identify the issue faster.

I went through this exact same situation two years ago and learned some hard lessons. My 1098 showed my principal balance was about $15k higher than reality, and I made the mistake of just ignoring it and filing my taxes with the correct numbers from my online account. Everything was fine until I got audited 18 months later. The IRS noticed the discrepancy between what I reported and what my 1098 showed. Even though I had screenshots and account statements proving the correct balance, it created unnecessary complications and延ed my audit process by several weeks. The auditor eventually accepted my documentation, but she strongly recommended that in the future I should always request corrected tax documents rather than just using alternative proof. Her exact words were "tax documents should match what you report, even if the error doesn't affect your tax liability." My advice: bite the bullet and get the corrected 1098. Yes, dealing with mortgage servicers is painful, but it's better than potentially explaining discrepancies to the IRS later. Document everything - your calls, emails, and the timeline of your correction request. This creates a paper trail showing you tried to fix the error in good faith.