Your Car Lender Mails You a New Tax Form in January. Only One Name on the Loan Gets It, and Under $600 It Doesn't Have to Come at All.

If you financed a new car this year, your lender has to mail you a new tax form by January 31. It’s the paper trail for the car loan interest deduction, worth up to $10,000 a year.

Plenty of borrowers won’t get one. Others will get one with a smaller number than they expect. Know why before tax season, not during it.

The fine print landed October 1

The IRS posted the final instructions for Form 1098-VLI, the “Vehicle Loan Interest Statement,” on October 1. Read them and three gaps jump out.

First, the $600 line. Lenders report interest “of $600 or more.” Below that, they’re “not required to file.” Bought a $35,000 car at 7% in October? Your first full month of interest runs about $204. Two payments before New Year’s and you’re under $600. No form.

Second, one name. The form goes only to the “payer of record,” the person the lender carries as the principal borrower. If the paperwork doesn’t say, the lender picks one. Co-signed with a partner you don’t file jointly with? Only one of you gets the form, and it shows all the interest.

The instructions even spell out the family version: “if the borrower’s parent makes payments,” that interest is reported “as received from the payer of record.” Mom pays, the kid’s name goes on the form.

Third, the number in box 1 may be trimmed. Lenders must leave out interest on any part of the loan that doesn’t qualify. That includes negative equity rolled in from your trade-in, cash the lender handed you, and non-credit insurance or unrelated stuff financed with the car.

What it costs you to ignore this

The deduction is real money. The IRS caps it at $10,000 a year and phases it out above $100,000 of modified adjusted gross income ($200,000 joint). Interest you can’t document is interest you’ll second-guess on your return.

Box 6 and box 7 matter too. Box 6 is checked if the car was new to you. Box 7 is checked if final assembly happened in the United States. The deduction requires both, so blanks there are a flag worth chasing.

Do this before January

Find your loan contract now and check which borrower is listed first. If that’s not the person who’ll claim the deduction, call the lender and ask who its records name as principal borrower.

Rolled negative equity into the loan? Ask for the breakdown of qualifying and nonqualifying balance, and read our piece on how the final rules split that interest.

If you bought late in the year, save your December statement showing interest paid. Don’t wait on a form that may never come.

When the form arrives, check the VIN, then plug it into NHTSA’s VIN decoder to confirm the plant of manufacture. If box 6 or 7 is blank on a new, U.S.-built car, call the lender and ask for a corrected form.

Still shopping? A lower rate beats any deduction. Run the payment on our loan calculator and compare offers on our best loan rates page. Our deduction explainer covers who qualifies.

The detail

The form exists because of new section 6050AA of the tax code. A refinanced qualifying loan can still count, but only up to the old balance, and cash-out doesn’t. Lenders don’t file the form at all unless the loan was secured by a first lien on the vehicle when it was made.

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