In a recent post here, I ranted about our self-absorbed politicians who, by there bickering, dickering, and bartering, had allowed the extension of the tax forgiveness law to move to the back burner of their 2014 agenda – at least until after the mid-term elections, where, as Alec Trebeck is wont to say about Double Jeopardy, “the scores can really change.” And that they did. The Dems got trounced, as I explained here. Agreement should have been reached in 2013, or at least early 2014.
So what happened after the Nov. 4 mid-terms? The issue of the “tax extenders,” of which the forgiveness law is one, got immediately resolved. Even Harry Reid agreed. Problem was, once Mr. Obama learned the terms of the bipartisan agreement, he vowed to veto it. So back came the legislation, with an agreement to extend everything for one year only. [For the tortured history of tax extenders, see my post here.]
A one year extension, which only applies to this year, 2014, just passed the House. The legislation moved to the Senate on Thursday. We have no report on that yet, but it is likely a fait accompli.
This is very good news for those folks who had a distressed housing event, such as a foreclosure or short sale, in which some of their mortgage debt was cancelled by their lender. Unless it falls into an exception, cancelled debt is treated as income, and subject to income tax on the federal and, in the case of Oregon, state level. Not being able to pay your mortgage is one thing, but being taxed for the moneys you could not affort to pay, is quite another. [To learn more about the issue and the forgiveness law, go to my post here.]
Problem is, those folks who will need the foregiveness protection in 2015 will have to go through the same waiting game as their predecessors did this year. Some way to run a government, huh? ~PCQ