Credit Dusters

This morning I talk about the economy and how we cannot put our trust in the government or man.

03/07/09

When you feel down or anxious about  the economy just remember that it is the PEOPLE (You and Me.) that makes this country go round and not the government. We are the engine of commerce! So read this article to get some inspiration and then figure out a way to make more money. You can do it! Others are doing it..don’t be a victim.

Some Indie Facebook Developers Pulling In Over $700,000 A Month - You should be inspired by this article. You don’t have to make this kind of money, but even just an addition $500.00 a month would make a huge difference in most homes.

If your mortgage debt is partly or entirely forgiven during tax years 2007 – 2012, you may be able to claim special tax relief and exclude the debt forgiveness income.

Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence. The limit is $1 million for a married person filing a separate return.

Taxpayers may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.

However, proceeds of refinanced debt used for other purposes (for example, to pay off credit card debt) do not qualify for the exclusion.

If you qualify, you claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attaching it to your federal income tax return for the year.

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 tax relief provisions, (for example, insolvency), may be available. See Form 982 for details.

If your debt is reduced or eliminated you will receive a year-end statement, Form 1099-C, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.

The IRS urges borrowers to examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for your home (Box 7).

Unclaimed refunds totaling approximately $1.3 billion are awaiting over a million people who did not file a federal income tax return for 2005, the Internal Revenue Service announced today. However, to collect the money, a return for 2005 must be filed with the IRS no later than Tuesday, April 15, 2009.

Especially in these tough economic times, people should not lose out on money that is rightfully theirs,” said IRS Commissioner Doug Shulman. “People should check their records, especially if they had taxes withheld from their paychecks but were not required to file a tax return.  They may be leaving money on the table, including valuable tax credits that can mean even more money in their pockets.”

The IRS estimates that half of those who could claim refunds for tax year 2005 would receive more than $581. Some individuals may not have filed because they had too little income to require filing a tax return even though they had taxes withheld from their wages or made quarterly estimated payments.  In cases where a return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund. If no return is filed to claim the refund within three years, the money becomes property of the U.S. Treasury. For 2005 returns, the window closes on April 15, 2009. The law requires that the return be properly addressed, postmarked and mailed by that date. There is no penalty assessed by the IRS for filing a late return qualifying for a refund.

The IRS reminds taxpayers seeking a 2005 refund that their checks will be held if they have not filed tax returns for 2006 or 2007. In addition, the refund will be applied to any amounts still owed to the IRS and may be used to satisfy unpaid child support or past due federal debts such as student loans.

By failing to file a return, individuals stand to lose more than refunds of taxes withheld or paid during 2005. Many low-income workers may not have claimed the Earned Income Tax Credit (EITC). Generally, unmarried individuals qualified for the EITC if in 2005 they earned less than $35,263 and had more than one qualifying child living with them, earned less than $31,030 with one qualifying child, or earned less than $11,750 and had no qualifying child. Limits are slightly higher for married individuals filing jointly.

Current and prior year tax forms and instructions are available on the Forms and Publications web page of IRS.gov or by calling 1-800-TAX-FORM (1-800-829-3676). Information about the Earned Income Tax Credit and how to claim it is also available on IRS.gov. Taxpayers who need help also can call the toll-free IRS help line at 1-800-829-1040.

The First Time Homebuyer Credit is a one-time tax refund intended to stimulate the economy as well as provide incentive to purchase a home. This is a complicated refund because it has both time constraints as well as many qualifying restrictions. This guide will help unravel the qualification and amount allowed.  

Eligibility:

The next thing to determine is eligibility. The following will provide the parameters to qualify for the tax refund. 

1. The “First” Behind First-Time.  To be considered a First-Time Homebuyer a buyer must not have owned any other main home during the 3-year period ending on the date of purchase.  If the buyer is married then this would include the history of the spouse as well.

 Example:  A home was bought on March 12, 2009. To qualify as a First-Time Homebuyer the buyer could not have owned a home on or after March 12, 2006.

2. Main Home. The buyer has to live in the home most of the time in order to qualify. It can be a house, houseboat, house trailer, cooperative apartment, condominium, or other type of residence.

3. Income Limits. Hang on. The calculation for Income Limits to qualify can be confusing. The limit is based on the Modified Adjusted Gross Income.

Individuals – To get the full refund income cannot exceed $75,000. Must make less than $95,000.00 to qualify.

Married Filing Jointly – To get the full refund income cannot exceed $150,000.00. Must make less than $170,000.00 to qualify                                

(The Calculation: Check out the FORM 5404 for the calculations.)

4. Purchase Price. The refund is based on 10% of the purchase price to a maximum amount. The maximum amount is determined by what year the home was purchased.

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