USA mortgage interest refund

[mdchapii]

Can someone explain to me how a mortgage interest refund to me is considered income! I didn't itemized any previous years, just standard deductions. The mortgage company gives back to me my overpayment and files their 1098 as required and the IRS says it is income to me, although it was my money to begin with!

 

[kirby]

You only count refund as income if you had taken the interest deduction, which you did not do.

 

[ColinCPA]

Can someone explain to me how a mortgage interest refund to me is considered income! I didn't itemized any previous years, just standard deductions. The mortgage company gives back to me my overpayment and files their 1098 as required and the IRS says it is income to me, although it was my money to begin with!

Did you file for a Mortgage Credit Certificate program with your bank in your state and take the mortgage credit in leiu of the itemized deduction? If so, the refund would represent a recovery and would be taxable. Otherwise, this doesn't make any sense.