http://www.whitehouse.gov/Recovery
Look for the tax savings tool link. Click on the link and answer some questions. The site should guide you to some potential tax savings that you or your preparer are not aware of.
As with any reference source, take what you can and discuss the items in questions with your CPA.
Tuesday, March 23, 2010
Thursday, March 4, 2010
Ten Facts About Mortgage Debt Forgiveness
A quick Note on Mortgage Debt Forgiveness
If your mortgage debt is partly or entirely Forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income. Here are 10 facts the IRS wants to know about Mortgage Debt.
1. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.
2. The limit is $1 million for a married person filing a separate return.
3. You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.
4. To qualify, the debt must have been used to buy, build, or substantially improve your principal residence and be secured by that residence.
5. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.
6. Proceeds of refinanced debt used for other purposes - for example, to pay off credit card debt - do not qualify for the exclusion.
7. If you qualify, claim the special exclusion by filing out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the year in which the qualified debt was forgiven.
8. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions - such as insolvency - may be applicable. See IRS Form 982 for specific details on this.
9. If your debt is reduced or eliminated you normally will receive a year-end statement. Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.
10. Examine your 1099-C carefully. Notify the lender immediately if any of the information shown is not accurate. Particular attention should be paid to Box 2, Amount of Debt Forgiven, and Box 7, The value of your home.
For more information on the Mortgage Forgiveness Debt Relief Act of 2007, contact the IRS or your local Staten Island CPA.
Goldenthal & Suss CPA's & Consultants, P.C.
David C Egan, CPA
465 Belfield Avenue
Staten Island, NY 10312
718-227-6035
If your mortgage debt is partly or entirely Forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income. Here are 10 facts the IRS wants to know about Mortgage Debt.
1. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence.
2. The limit is $1 million for a married person filing a separate return.
3. You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.
4. To qualify, the debt must have been used to buy, build, or substantially improve your principal residence and be secured by that residence.
5. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.
6. Proceeds of refinanced debt used for other purposes - for example, to pay off credit card debt - do not qualify for the exclusion.
7. If you qualify, claim the special exclusion by filing out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the year in which the qualified debt was forgiven.
8. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax relief provision. In some cases, however, other tax relief provisions - such as insolvency - may be applicable. See IRS Form 982 for specific details on this.
9. If your debt is reduced or eliminated you normally will receive a year-end statement. Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.
10. Examine your 1099-C carefully. Notify the lender immediately if any of the information shown is not accurate. Particular attention should be paid to Box 2, Amount of Debt Forgiven, and Box 7, The value of your home.
For more information on the Mortgage Forgiveness Debt Relief Act of 2007, contact the IRS or your local Staten Island CPA.
Goldenthal & Suss CPA's & Consultants, P.C.
David C Egan, CPA
465 Belfield Avenue
Staten Island, NY 10312
718-227-6035
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