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Like zombies, 3 tax breaks return from the dead to further confuse filers

Susan Tompor, Detroit Free Press on

Published in Home and Consumer News

2) Mortgage insurance premiums

Homeowners who pay private mortgage insurance or what' s known as PMI want to pay attention here, especially if they're living on a tight budget.

Mortgage insurance premiums can be treated on 2017 returns as qualified residence interest, generally claimed on Schedule A. See Line 13 under the category "Interest You Paid."

This tax break is generally claimed by low- and middle-income filers, according to the IRS.

You cannot take this deduction if your adjusted gross income is $54,000 or more if single or $109,000 or more if married filing jointly.

3) Foreclosure-related debt forgiveness

The extension of this tax break only impacts taxpayers who foreclosed on their homes last year or possilby in earlier years. But it's a sizable tax break if you found yourself in that situation.

If you receive a 1099-C, you need to report the forgiven debt as income. But the Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. The provision applies to debt forgiven in calendar years 2007 through 2016 -- and now it was extended to 2017.

No one who is facing financial trouble, of course, wants to add $70,000 or $100,000 of cancelled mortgage debt onto their taxable income when filing a federal return.

"If you put $100,000 in extra income on your tax return, you want to get that off pretty quick," Steber said.

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