| Sometimes it can feel as though the government | | | | Mortgage Debt Relief Act, any savings made |
| doesn't usually give out tax breaks; however, that | | | | through forgiveness or refinancing are no longer |
| is exactly what the government has done with | | | | classed as income. The money still has to be |
| some new legislature that was passed in 2007. | | | | reported using Form 982, but it is no longer eligible |
| The IRS Mortgage Debt Relief Act was designed | | | | to be taxed, and thus people no longer find |
| in order to help out the people who had fallen | | | | themselves facing larger tax bills. However, there |
| behind with their home loan and mortgage | | | | is an exception to this. If the savings came from |
| repayments and who were receiving help from | | | | forgiveness on a second home, or a second |
| their lenders either through the form of | | | | mortgage, then the amount saved does still count |
| forgiveness, or from refinancing their debts onto | | | | as additional income. |
| a lower rate. | | | | Even though the IRS Mortgage Debt Relief Act |
| Before the IRS Mortgage Debt Relief Act, if an | | | | was passed in 2007, it also covered the 2008 tax |
| individual received help through forgiveness, or | | | | year, and will cover the 2009 tax year too. With |
| from refinancing, then the amount of money he | | | | the current state of the economy, with more and |
| saved would be classed as extra income by the | | | | more people facing unemployment and financial |
| government. This extra income had to be | | | | turmoil, many people are expecting the act to be |
| reported on the individual's income tax return, and | | | | extended, in order to help more people get back |
| of course this would usually push that person up | | | | onto their feet in these difficult times. It is |
| into a higher tax bracket, meaning that he would | | | | important for people to be aware of the IRS |
| have to pay additional taxes. The people who | | | | Mortgage Debt Relief Act so that they do not |
| needed this help were already struggling with | | | | miss out on this tax break. Most of the software |
| financial difficulty, so this additional tax effectively | | | | packages used to calculate taxes include an |
| canceled out any help individuals were receiving in | | | | electronic version of Form 982, but there are |
| the first place, and actually made them worse off. | | | | some older versions out there which do not |
| In order to counter this, the government decided | | | | include this form, so make sure to check your |
| that action needed to be taken, and thus created | | | | software so you don't miss out! |
| the IRS Mortgage Debt Relief Act. Under the IRS | | | | |