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