Today TaxMama® hears from Jennie in the TaxQuips Forum, with a good question. “I took out a mortgage from a private party 4 years ago. They have never sent me a mortgage interest statement. Therefore, I have never included it on my taxes. I realized that is a HUGE mistake as I would most likely benefit financially from including this. I am wondering how many years I can go back to retroactively include the mortgage interest on my taxes?”

Dear Jennie,

Do you have a loan contract with the private party? And can you prove you made the payments?

If the answer is yes, you can go back up to three years. If you file the amended return for 2009 before April 15th, you can still catch that year – otherwise you lose it.

When you file the 1040X to deduct the mortgage interest, it will be like a mini audit. Include all the documents that prove the existence of the mortgage, the interest amount, and the proofs of payment. Include an amortization schedule that shows how much of your payment was interest and principal each year, to support the amount of your interest deduction.

If you don’t include all the details, it will take 6 months or more to get your refund instead of 2 or 3 months. The IRS will have to waste time corresponding with you and asking questions you could have answered in the first place. So get to this quickly and file for 2009 this week.

And remember, you can find answers to all kinds of questions about amending tax returns and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

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