The recent recession has a way of making people do things they may not normally do; like conducting an online research for items that could give them IRS tax relief. After all, with the price of everyday items going up while the income per capita remains the same, many people would find ways to avoid having to owe the government any money at all, if possible. If previously getting as much relief from taxes was not considered as a priority, now you probably would purposely do something you have not done before simply so that you could benefit from the relief. Of course, who wouldn’t want to have the government owing them money instead of the other way around?

When the Mortgage Forgiveness Debt Relief Act of 2007 was introduced, many homeowners who were on the verge of having their primary residences foreclosed were, well, relieved that they would qualify for the IRS tax relief on their foreclosed property. Of course, not all property owners would qualify for this type of relief. The Act was enacted to protect homeowners who are actually living in their primary home from having to pay taxes on the amount of debt that was cancelled or forgiven as result of foreclosure. Generally the cancelled debt has to be less than $2 million (or $1 million if you are married and are filing your taxes separately). Your lender may be required to send you Form 1099-C stating the amount of your canceled debt for your record. Your part would be to indicate the type of indebtedness cancellation and the amount of debt to be excluded from your gross income.

You may also qualify for a relief if you are a victim of a disaster or an emergency. It would be easier for you if the federal government declares your location as a major disaster area. However, you may not qualify for back tax relief even if you are in a disaster area. You may only be relieved of the taxes for the current year. Of course, you may still liaise with the IRS and request that they agree to an installment payment plan. In this situation, your delinquent tax bill should not be more than $25,000 including all penalties and interest. This payment plan may deter the IRS from seizing your property provided you keep your payments current. However, you could still be accumulating interest and penalties.

If you are disabled, you may also qualify for tax relief. Even so, there are quite a few categories of disability that you could fall into. Therefore, you may need to make sure which category you belong to. For example, if you are over 65 years old or visually impaired you may qualify for a higher standard deduction whereas if you are partially blind you may need a certified statement from your doctor confirming that you only have 20/200 vision in one eye or that your field of vision is 20 degrees or less. You may also qualify for a relief in taxes if your medical costs exceed 7.5% of your income. Of course, the medical costs may include expenses that could be related to your disability such as medications or treatment for your condition.

Sadly, there are not a lot of circumstances that would qualify a lot of people for a relief from their taxes. The relief from taxes was meant for people who really need it like victims of a disaster and disabled people. However, due to the recent drop in property value, there may be a temporary relief that would be given for homeowners for a limited period of time.

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Category: Finances
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