2007 Tax - What is the Mortgage Forgiveness Debt Relief Act of 2007?

By: Robert A. Johnson

With so many people finding themselves facing foreclosure the American government finally stepped in to help out a little. Although nothing could be done about saving the homes, there was The Mortgage Forgiveness Debt Relief Act of 2007 which was enacted on December 20, 2007.

What this means is that some or all of the debt that is left from a foreclosure can be forgiven for the 2007 tax return and the following two years. Before this act was passed, any debt that was left after the foreclosure of a home was basically considered taxable income and had to be claimed on that year’s income taxes.

This act only applied to debt that was obtained due to the purchase of a person principal residence or to improve the residence. The Mortgage Forgiveness Debt Relief Act of 2007 applies to the 2007 tax return along with the 2008 and the 2009 tax return. When people had to file 2007 taxes they still had to report the debt on their tax return. The form 982 has to be filed out and attached to the rest of your 2007 tax return.

Form 982 will have to be filed out for those who are filing for this relief on their 2008 and 2009 taxes. The form can be easily obtained by downloading it from IRS.gov. It is also good to know that as long as the loan amount that you are seeking help on was less then two million dollars it will be covered. If married couples are filing separately then it is one million dollars.

Just keep in mind that this form and this act cannot be used for second homes or rentals that a person had which were foreclosed on. There can be extensions on your 2007 tax return filed though in order to give extra time to pay the taxes on that debt since it is likely to be a good amount of money.

While this doesn’t solve the problem of not having a home any longer, it is at least a good amount of help to make sure those who lost their homes have an easier time moving on as they will not have to pay taxes on that debt.

Don’t overlook the adoption credit in the 2007 tax return

By: Robert A. Johnson

Adoption is near and dear to my heart, as I was an adopted infant. I have researched adopting hard to place kids, and was happy to find that with some of the struggles that are unique to adopted families, the expense of bringing that dream home is offset with a tax credit. While the cost of raising a child cannot be calculated to make it financially profitable, having a tax adoption credit available makes adoption much more achievable for many families that long for a child. If you have started the adoption process, you know the costs associated can be overwhelming.

The tax laws for adoption credit are fairly generous. Any direct expenses, such as travel, attorney, court and other legal costs, are deductible. The adopting parent (s) can claim an adoption credit of up to $11,650 for 2008 for each eligible child. In order to qualify for this, you must have paid for adoption expenses out of your own pocket, any you must have adopted an eligible child. This means any child 17 or younger, or any US citizen or resident alien who is physically or mentally unable to care for themselves.

For adopting parents who adopt a special needs child, the full amount of the adoption credit can be claimed, regardless to what year the adoption became final. For children who are US citizens, you may take the adoption credit in the year after your expenses were paid (if the adoption was not final), or the same year if it was finalized. For foreign adoptions, the tax credit is only available the year the adoption was finalized. You must get an Adoption Taxpayer ID number if no Social Security number is issued.

The max dollars you claim for this credit is limited by your actual expenses as well as the phase out range for income. If you had one failed adoption attempt, you can write off your expenses for both processes once you have a finalized adoption. If you are filing a prior tax return, or any 2007 tax form, it would be best to hire an accountant with expertise in this tax credit area to make sure you get your full tax credit if you have adoption expenses. There are some expenses you can’t claim with this credit, such as surrogate mother expenses, so make sure you are doing things right.

This is encouraging for families who want to find a way to make a difference in the lives of a child, or to add to their family. Adoption is a beautiful gift, and now you can find a way to afford it. Don’t limit yourself to where you find that perfect addition. The different states often have children available that need a family, and it is much less expensive than overseas adoption. If you want to go overseas, though, the incentives on your taxes take the sting out of the money it costs. There is no way to put a price on your child, so go change a child’s world, and the 2007 tax adoption credit will help you do it.