IRS Debt Relief Act Was Created to Help People Just Like You – Find Out How to Take Advantage of It
Over the past couple of years, the economy has really taken a battering. In fact, many people are comparing the current economic climate to that of the Great Depression of the 1930s. A lot of people are finding themselves out of work, and this is having a major affect on their ability to make mortgage repayments, as well as payments for other possessions such as cars. With so many people experiencing a loss of income, the number of home owners who are unable to make their mortgage and loan repayments has drastically increased and therefore lenders are having to threaten more and more foreclosures and repossessions. These are the frightening prospects being faced by many people right now.
In 2007, the IRS Debt Relief Act, which is also known as the mortgage Forgiveness Debt Relief Act, was passed in order to help people who are in financial difficulty. The IRS Debt Relief Act is designed to make it easier for homeowners to get financial help with their mortgage, and also allows homeowners a tax break on the money that they saved during the course of this support. Before the IRS Debt Relief Act was in place, if a person was forgiven payments on his mortgage, then that amount of money had to be listed as additional income on his tax return form. This additional income was then taxed, resulting in many homeowners actually paying more tax, which totally canceled out any relief they were getting in the first place.
How The IRS Debt Relief Act Helps
However, since the IRS Debt Relief Act, the money that is forgiven is reported to the government using Form 982. The forgiven money is no longer classified as additional income, unless it was from a second home, and therefore individuals no longer have to pay the additional tax on this amount. Depending on how the economy reacts over the next few years, the IRS Debt Relief Act may need to be extended or revised, as at present it covers the tax returns for 2007, 2008 and the returns that will be filed in 2009.
Since the IRS Debt Relief Act was passed very late in 2007, it caused a great stir among accountants who had to scramble to get up to speed with the new legislation. Not only this, but the electronic version of Form 982 was not available online until March 2008, which means that all tax returns filed before this date had to include a paper version of the form — which caused extra work as most accountants prefer to work electronically.
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