Answers To Your Tax Questions

February 1, 2012

Don’t throw this away! Form 1099-C reports your Cancellation or Forgiveness of Debt. You must report the amounts in box 2 as income on line 21 of your Form 1040 unless you meet an exclusion.  Taxpayers may qualify for one of several exclusions that allow them to reduce taxable income from canceled debts. The exclusions include debts discharged during bankruptcy and insolvency.

Homeowners who default on mortgage loans on their primary residences may also qualify for an exclusion from income on foreclosures. This provision applies to up to $2 million in mortgage debt forgiven in calendar years 2007 through 2012. Taxes filed by the April 2013 deadline will be the last opportunity to claim the mortgage debt forgiveness exemption -- unless Congress passes an extension.

January 27, 2012

You can get a little something if you haven't used this credit previously.
To claim your "Nonbusiness Energy Property Credit" use Form 5695 Part I, Line 6A.
Technically, your wood stove qualifies because it is a biomass stove and it has been certified by the dealer to qualify. You must save all stove documentation and decrease the basis of your house by the amount of the credit received.
For 2011, the credit is limited to $500- cumulative since 2006. So if you have taken more than $500 of energy credits previously you cannot take this credit.
 

January 23, 2012

No. For 2011 you are not permitted to deduct non-prescription drugs except for insulin. Supplements, vitamins, cough syrups, band-aids and other over-the-counter items are all excluded.

Medical Expenses for 2011 are deductible if you itemize on Schedule A and they exceed 7.5% of your Adjusted Gross Income. For 2012, that is set to revert to 10% of your AGI.