The Mortgage Forgiveness Debt Relief Act of 2007 to the rescue...

The Mortgage Forgiveness Debt Relief Act of 2007 was signed by President Bush on December 20, 2007.

Mortgage Debt Forgiveness:
Normally a forgiven debt is counted as income for the taxpayer. However Mortgage Relief Act of 2007 allowed taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualified for this relief.

Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately). The exclusion doesn’t apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.

The amount excluded reduces the taxpayer’s cost basis in the home

The new law applies to debt forgiven in 2007, 2008 or 2009. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief. In most cases, eligible homeowners only need to fill out a few lines on Form 982 (specifically, lines 1e, 2 and 10b).

The debt must have been used to buy, build or substantially improve the taxpayer's principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.

Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other kinds of tax relief, based on insolvency, for example, may be available

Mortgage Insurance Premiums:
Taxpayer can deduct mortgage insurance premiums as “home mortgage” interest on premiums paid after December 31, 2006 and before January 1, 2011.

Much Awaited Stimulus Check!

Most of you must have received the stimulus rebate. For those who did'nt..

You can check the status of the stimulus rebate(on IRS website) at the link

Where's My Refund?

Still waiting for the IRS tax refund check!

You can check the status of the refund(IRS website) at the link

Tax Refund Status

Still waiting for the IRS tax refund check!



You can check the status of the refund(IRS website) at the link below-

https://sa1.www4.irs.gov/irfof/lang/en/irfofgetstatus.jsp

Minimum Wage Increase

Effective today, July 24, 2008, the federal minimum wage for covered nonexempt employees is $6.55. The federal minimum wage provisions are contained in the Fair Labor Standards Act (FLSA).

Many states have minimum wage laws. In cases where an employee is subject to both state and federal minimum wages laws, the employee is entitled to the higher of the two minimum wages.

Recent Scams to steal identity - Posing as IRS

IRS has cautioned taxpayers to be very careful of scams consisting of e-mails requesting detailed personal information.
IRS generally does not send e-mails to taxpayers, does not discuss tax account matters with taxpayers in e-mails, and does not request security-related personal information, such as PIN numbers, from taxpayers.
Most of these scams involve tax refunds and economic stimulus rebate receipt.

These are all scams to steal to identity......Hence, beware...

Filing Extensions Changing for Some Business Taxpayers Later this Year

IR-2008-084

IRS has announced a change in the extended due date on certain business returns to help individuals better meet their filing obligations. As a result the six month extension for Partnership and trust will change to five month and will be due on September 15th instead of October 15th.

This change will be effective for extension requests with respect to tax returns due on or after Jan. 1, 2009, and applies to business entities that file the following returns and forms that have a tax year ending on or after Sept. 30, 2008:

1. Form 1065, U.S.Return of Partnership Income

2. Form 1041, U.S. Income Tax Return for Estates & Trusts

3. Form 8804, Annual Return for Partnership Withholding Tax (Section 1446)

The regulation does not change the process for requesting an extension of time to file, nor does it affect extensions of time to file other types of business returns, such as those used by S corporations.

Extended Due Date

The due date for Corporation tax returns that filed an extension for 2008 is due September 15th, 2008. For individuals and Partnerships the due date is October 15th, 2008.

Capital Gain exclusion on Primary residence

As per IRC 121-
When you sell your primary residence, you can make up to $250,000 in profit if you're a single owner, twice that if you're married, and not owe any capital gains taxes if you meet the ownership and use tests. You will generally only need to report the sale of your home if your gain exceeds a certain dollar prescribed by law. You may be entitled to exclude gain from income if during the 5-year period ending on the date of the sale, you must have:

Owned the home for at least 2 years (the ownership test), and
Lived in the home as your main home for at least 2 years (the use test).
During the 2-year period ending on the date of the sale, you did not exclude gain from the sale of another home.

If you owned and lived in the property as your main home for less than 2 years, you may still be able to claim an exclusion in some cases (change in place of employment, health or unforseen circumstances)

2008 Auto Mileage Rate-

This is sent for informational purposes only- and may be helpful in tax planning for the year.
Effective July 1, 2008, the standard mileage rate deductible forbusiness purposes increases to 58.5 per mile. It was 50.5 cents per mile for Jan 1st 2008 thru June 30th 2008. It is advisable to keep written records that can prove the business purpose for miles claimed as this could mean a significant mileage deduction for the year.