The IRS Form 1098, or Mortgage Insurance Statement form, is used to report the mortgage interest you received in the course of that tax year. A mortgage, for tax purposes, is a loan secured by your primary home, second home, home equity loans, or refinanced mortgage. The home can be a house, condominium, cooperative, mobile home, boat, or similar property, but it must carry out vital functions of a home such as having sleeping space, bathroom space, and cooking space.

Your lender is only required to provide you with a 1098 if your property is considered "real property," which is defined as "land and generally anything built on it, growing on it, or attached to the land."

Filling out a Form 1098

The total amount of debt you can use for calculating your home mortgage interest deduction cannot be more that $1 million, or $500,000 if married and filing separately. Anything paid over that amount is largely inconsequential from a tax deduction standpoint.

The Form 1098 can only be filed if the mortgage interest and points equate to more than $600. However, some lenders will provide the document even if the $600 minimum has not been met. Your lender will also probably provide you with multiple 1098s if you have multiple mortgages.

Here's a breakdown of the different boxes on the Form 1098 and what they require.

Box 1: Is where you will report the total amount of mortgage interest you paid to your lender. You can deduct this entire amount on a Schedule A (used to report itemized deductions to help reduce tax liability). To take advantage of the mortgage interest deduction, you must itemize.

Box 2: Is where you include any points you paid at closing. Remember that just because you report them doesn't mean you qualify for the extra deduction.

Box 3: Is where your lender will report any refund or credit for a prior year's overpayment of interest. This box will almost always be left blank. It's strictly for your lender, so don't worry about leaving it empty.

Box 4: Is where your lender can report information to you about things that may be helpful when preparing your taxes. Your escrow money for real estate taxes may also be included here.

Box 5: Is where any real estate taxes not included on Box 4 will be recorded.