Saving Grace: IRS Mortgage Debt Relief Act
There have been a lot of economic changes in the last two years with many people losing their jobs and having a lot of financial difficulty with the mortgage lender. Since a person doesn’t have a good job and income source, they will start to risk losing their house and car because of the lost income. If you have a family to support, the idea of these prospects can be especially terrifying to you.
You can find many people taking advantage of the IRS Debt Relief Act or the Mortgage Forgiveness Debt Relief aAct that gives them a tax break when they need mortgage help. This IRS mortgage debt relief was a much needed piece of legislation, since previous to this time, if an individual was forgiven five to ten thousand dollars on their mortgage, that amount of money had to be shown on his income tax return, showing that he had that much additional money as income that year. The extra taxes always hurt the people that had needed to refinance or have mortgage forgiveness with extra tax penalties.
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Help with the IRS Debt Relief Act
The IRS Debt Relief Act allowed the amount of money that was forgiven on a mortgage to be reported to the government via Form 982, but the money was not usually counted against the individual unless it was from a second home. The IRS Debt Relief Act went into effect in 2007, but it covers the tax returns for the years 2007, 2008 and 2009 at present. The act will probably be extended or revised since the state of the economy is still struggling and we need all the help we can get.
When the IRS Debt Relief Act was passed it caused quite a stir in the accounting world that year since it was passed late in the season. That meant that the accountants had to learn just how the tax law applied so that they could pass on that help to their clients. In addition, the electronic Form 982 was not available until March of 2008 so all tax returns filed before that time had to include the form in paper rather than electronically.
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