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Big response to ABC7 Tax Tip Hotline

March 10, 2010 12:00:00 AM PST
We had a tremendous response Thursday to our annual Eyewitness News Tax Tip Hotline. During our 4, 5, and 6 p.m. shows, a team of certified public accountants answered your calls live.This year our experts answered nearly one-thousand calls related to taxes and the economy.

The response to our tax tip hotline was overwhelming. Unlike past years, the focus of questions this year was on unemployment benefits, foreclosures, and adults who have been forced to move back in with their parents.

From the moment we went on the air at 4 p.m. Thursday until the hotline ended two and a half hours later, the calls never stopped.

The accountants from the California Society of CPAs took call after call from Eyewitness News viewers who have lost their jobs and are now struggling to make ends meet.

"Lots of the phone calls basically from unemployed people trying to find out what type of tax breaks there are," said Wong.

Many of our viewers lost homes in the past year due to foreclosures.

If you owe money to a lender on a home loan because of a foreclosure, (and the lender forgives that debt), or you're in bankruptcy, that debt may no longer be subject to federal income tax.

The IRS used to assess income tax on any money you didn't have to pay back.

Say you bought a house for $1 million, and you only paid off $200,000, but could no longer afford the payments.

"For some reason, if you walk away from this house and couldn't pay back a single dollar of the $800,000, that is cancellation of debt when bank writes it off," said Wong. "That amount of $800,000, do we have to pay a tax on it? And the answer is no."

Increasing numbers of people who have lost their homes or their jobs are moving back with their parents.

And a number of our viewers wanted to know if they could claim their own adult children as dependents on their income taxes.

You can claim an adult child as an exemption if he or she is under the age of 24, is a full-time student and the parent is paying more than half of his or her financial support.

If your son or daughter is older than 24, you can list them as a deduction if their income is less than $3,650 and you have to pay at least half of his or her support.

Many people lost their jobs last year. Normally, unemployment benefits are taxable. But now the first $2,400 of unemployment benefits are excluded from taxes.