Over the past few years, the instability of the economy has been becoming more and more noticeable, and thankfully the government have taken steps to help out the people who really could do with a helping hand in these hard times. There are various IRS debt relief programs that have been introduced to give people more flexibility on their income tax returns. For instance, if you receive any help with your mortgage then this is not counted as additional taxable income anymore. Indeed, if it was counted, the extra tax you owed would actually cancel out the help in the first place! These IRS debt relief measures have been effective since 2007 and apply to the income tax returns that were filed in 2007, 2008, and those that will be filed in 2009.

In 2007, the Mortgage Forgiveness Debt Relief Act was introduced, and this helps home owners to keep up to mortgage repayments, so that they avoid foreclosures and repossessions. This form of IRS debt relief also allows the mortgage companies to be that much more flexible when they are working with customers, meaning that they can be more lenient on late or missing payments. Before the act, any money that was rolled back into the loan, or was forgiven would be classed as income, and would be taxed. However, under this new act, the IRS is allowing people to show the amount that was forgiven or rolled back, but this is no longer counted as taxable income, which means that you no longer have to pay additional tax on this financial help.

It is really important that everyone knows about these IRS debt relief measures when filling out tax return forms themselves, because otherwise they could still be counting any financial aids against themselves, and hence paying a lot more tax than they need to. You need to complete Form 982 so that the IRS can see how much money was forgiven or rolled into your loans. Most of the tax return software programs have this already built into them now, but if you are using an old version of the software you should be aware that it may not have been updated since the introduction of the Mortgage Forgiveness Debt Relief Act in 2007. Of course, if your tax returns are completed by an accountant then they should already know about these changes, but it never hurts to check. If you feel that you have been paying more tax than you actually owed, then speak to an accountant about how to go about claiming that money back.

To find more information like this visit Suze Fulton’s website about Debt Consolidation. Suze has made it her life’s goal to help individuals get out of debt. Read her most recent website post reviewing ZipDebt. It’s not what you think.

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