Print
Families struggling to stay in their homes and working through loan modifications with their lenders are being targeted with the following message broadcast by the National Taxpayer Advocate. Nina Olsen, an employee of the IRS:
“If your home has been foreclosed on, something you may not realize…is that the debt that is forgiven you is actually taxable income - unless another exception applies in the tax laws. And it’s not just limited to home foreclosures. If a credit card has been cancelled and the debt is forgiven or your automobile is repossessed, all of those result in what we call cancellation of debt income.”
Fortunately, Congress in its wisdom recently passed special legislation sparing qualified homeowners from paying taxes on the cancelled foreclosure debt. But relief is not automatic and to qualify homeowners must file IRS Form 982…which most people don’t even know.
Unless homeowners file the right tax form, they will be subject to increased federal taxes. And what about state taxes? .Looks like Ms. Olsen has her work cut out for herself.
Listen to the audio here: http://www.prnewswire.com/broadcast/36559/press.html
Leave a Reply