Thursday, January 22, 2009

Economic Downturn Income Tax Issues

Given the current economic situation, the IRS is beginning the 2009 tax season with information to help financially challenged taxpayers. The IRS is doing such things as postponing collection actions, being more flexible with missed payments, conducting second reviews when local real-estate valuations are in question, arranging options to help taxpayers avoid default, and expediting levy releases for hardship reasons. For more details about this assistance, see IRS Begins Tax Season 2009 with Steps to help financially Distressed Taxpayers.

The IRS has also created a page of "what-if" scenarios listing possible consequences for topics ranging from losing a job or losing a home through foreclosure to filing for bankruptcy protection, withdrawing money from an IRA, or facing drops in value for a 401k.