In troubled times such as these, when there is rampant unemployment and the fear of foreclosure among other issues, many people have questions related to filing their taxes. We will be covering a few situations where it would be beneficial to contact the IRS and find a solution. Whatever happens, though, make sure you do file your taxes (even if you are unable to pay any dues) to avoid penalties.
1. What if I have lost my home to foreclosure?
According to the Mortgage Forgiveness Debt Relief Act of 2007, taxpayers are typically allowed to exclude any “income from the discharge of debt on their principal residence or mortgage restructuring.” You could be able to file an amended return for previous years. For more information, visit The Mortgage Forgiveness Debt Relief Act and Debt Cancellation.
2. What if I have sold my home at a loss?
Losses occurring from the sale of personal property such as a home, car etc., are not deductible. “It is not eligible for the capital gains loss of up to $3,000 annually.” Visit Publication 523, Selling Your Home for more information.
3. What if I have lost my job?
Be extra careful when filing taxes after the loss of a job. The severance package and unemployment compensation that your receive are taxable income. Also, payments received for accumulated vacation or sick time also are taxable. For detailed information on related tax issues, visit Publication 4128, Tax Impact of Job Loss and the Tax Center to Assist Unemployed Taxpayers.
Even though there are many more ‘What If’ situations, we found these three to be the most prevalent in the nation; hence the selection. For any help with tax related IRS form 4506-T, please contact 4506-Transcripts.com.