An Enrolled agent is the only tax practitioners licensed by the U.S. Department of the Treasury to represent taxpayers before all administrative levels of the Internal Revenue Service (IRS) on issues including collection, audits and appeals.
When you look around at what the most current issues happening in our economy, country and local businesses it seems the importance of a qualified tax practitioner is something we all need. As an EA we are required to stay current on any and all tax issues that the public gets faced with.
Taking a closer look at the foreclosures and increasing amount of Short Sales on real estate, there are enormous repercussions ending with tax increases in the tens of millions of dollars.
Whether it is your main home or an investment property, there are rules and ways that you can protect yourself from having to pay thousands dollars from your hard earned money to the IRS for loosing property.
If you modified your property and received an addition to your income and ended up with a tax liability from that you know that in these uncertain times, you need someone who is on your side and not out to take from you and your family.
There are many exceptions to the Cancellation of Indebtedness Income that the 1099C attempt to make many Americans liable for those tens of millions of dollars those banks are anxious “forgive”.
If the house is your primary residence you can exclude a certain amount of that income. To qualify for primary residence you have to have owned and lived in the property for 3 out of the last 5 years.
The other most popular exemption is Insolvency. Insolvency is complicated due to the nature of the actual date of acquisition. The only way to verify a date of acquisition with the bank they will need to issue you a 1099A or you will need the selling contract and title paperwork. Once you have that you are only insolvent up to the amount your liabilities are more than your assets. Any amount that is forgiven over that could cause you some un-needed heartache.