Does Massachusetts allow the cancellation of debt to be excluded from income tax due to a foreclosure?

k_millea · ‎June 4, 2019

ScruffyCurmudgeon · ‎June 4, 2019

Unfortunately, Massaschusetts Dept of Revenue did not and does not Adopt this provision of the Federal Mortgage Forgiveness Debt Relief Act, irrespective of its extension at the Federal level.

See attached statement of DOR

If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67

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atteckus · ‎June 4, 2019

Massachusetts follows IRC Sec. 108 as it existed in 2005. There are some provisions that could enable a taxpayer to exempt or exclude debt cancellation income. Research thoroughly and see IRS Form 982 and IRS Pub. 908. Scruffy's answer covers one limited aspect and is not a thorough or completely correct answer.

ScruffyCurmudgeon · ‎June 4, 2019

See 2017 UPDATE - not sure where you @atteckus drew your information, but MASS DOR Instructions are clear on this!

If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67

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ScruffyCurmudgeon · ‎June 4, 2019

According to the 2017 Instructions for Form 1 Massachusetts Income Tax:https://www.mass.gov/files/documents/2017/12/06/dor-2017-inc-form-1-inst.pdf

Page 5: What Is Gross Income? Massachusetts gross income includes the following:

? forgiveness of debt;
? mortgage forgiveness;

Page 19 Instructions for Schedule X Line 4:

Fees and Other 5.1% Income The following items should be reported on line 4 of Schedule X.

? Forgiveness of debt and mortgage forgiveness.

If this posted response is useful to you, please click on the upraised hand in the lower left of this post. Thank you. Scruffy Curmudgeon--PFFM/ IAFF, retired FireFighter/Paramedic - Locals 718/30, Veteran USAR O3 AIS/ASA '65-'67

NOT INTUIT EMPLOYEE
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- Just donating my time
**Say Thanks by clicking the thumb icon in the lower left corner -it means nothing but makes those than answer feel wanted.

k_sanders222 · ‎February 8, 2020

I foreclosed on my main home in 2012 and filed bankruptcy. I just received a 1099C dated 3/13/2019 and live in MA. Why did I receive this now this many years later? Why am I obligated to pay 5% Mass Tax on this now? Is there anyway to get around this?

wlrosenfeld · ‎March 11, 2020

I suggest you contact the Low Income Taxpayers Clinic at Greater Boston Legal Services. There is a tax group there that will be able to provide free expert assistance on your particular situation.

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Does Massachusetts allow the cancellation of debt to be excluded from income tax due to a foreclosure?