Filing Your Taxes Online is Fast, Easy and Secure.
Start now and receive your tax refund in as little as 7 days.

1. Get Answers

Your online questions are customized to your unique tax situation.

2. Maximize your Refund

Find tax credits for everything from school tuition to buying a hybri

3. E-File for FREE

E-file free with direct deposit to get your refund in as few as 7 days.

Filing your taxes with paper mail can be difficult and it could take weeks for your refund to arrive. IRS e-file is easy, fast and secure. There is no paperwork going to the IRS so tax refunds can be processed in as little as 7 days with direct deposit. As you prepare your taxes online, you can see your tax refund in real time.

FREE audit support and representation from an enrolled agent – NEW and only from H&R Block

1040 X Form

Free 1040ez Tax FormHow Do College Students File TaxesHow Can I Efile My 2010 TaxesTax Planning Us State Income TaxesFree Online TaxesState Tax Return Free E FileFull Time Student Filing TaxesFree 2012 Tax Return1040ez Form 20132012 Form 1040a InstructionsTax Act 2011 Free DownloadTax Form 20122010 Income Tax TableHow To File A 2012 Tax ReturnHttps Www Freefilefillableforms Org2011 Irs Form 1040How To Fill Out 1040 EzIrs Gov Form 1040a For 2012Turbotax Login2014 Federal Tax Form 1040ezHow To File A Tax Extension For Free1040x Processing TimeFree Tax Return H&r BlockFree Prior Year Tax Software1040 Us Individual Income Tax Return 2012H 7 R Block Free FileIrs 2011 Tax Return Forms2012 1040xFile 2012 Taxes Free OnlineHow To Amend A Tax Return 2012How Do I File My 2011 Taxes Now2012 Tax Filing2011 1040 Ez FormDo Unemployed People File TaxesFree Turbo Tax 2009File State Taxes FreeFile 2009 Taxes OnlineIrs Gov Efile1040ezIrs 1040x Form Instructions

1040 X Form

1040 x form Publication 3920 - Introductory Material Table of Contents Introduction Useful Items - You may want to see: Introduction This publication explains some of the provisions of the Victims of Terrorism Tax Relief Act of 2001. 1040 x form Under this Act, the federal income tax liability of those killed in the following attacks is forgiven for certain tax years. 1040 x form The April 19, 1995, attack on the Alfred P. 1040 x form Murrah Federal Building (Oklahoma City attack). 1040 x form The September 11, 2001, attacks on the World Trade Center, the Pentagon, and United Airlines Flight 93 in Somerset County, Pennsylvania (September 11 attacks). 1040 x form Terrorist attacks involving anthrax occurring after September 10, 2001, and before January 1, 2002 (anthrax attacks). 1040 x form The Act also provides other types of relief. 1040 x form For example, it provides that the following amounts are not included in income. 1040 x form Payments from the September 11th Victim Compensation Fund of 2001. 1040 x form Qualified disaster relief payments made after September 10, 2001, to cover personal, family, living, or funeral expenses incurred because of a terrorist attack. 1040 x form Certain disability payments received in tax years ending after September 10, 2001, for injuries sustained in a terrorist attack. 1040 x form Death benefits paid by an employer to the survivor of an employee if the benefits are paid because the employee died as a result of a terrorist attack. 1040 x form Debt cancellations made after September 10, 2001, and before January 1, 2002, because an individual died as a result of the September 11 attacks or anthrax attacks. 1040 x form Worksheet A. 1040 x form Figuring the Tax To Be Forgiven (For Decedents Who Filed a Return as Single, Married Filing Separately, Head of Household, or Qualifying Widow(er))         (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for tax forgiveness. 1040 x form 1       2 Enter the total tax from the decedent's income tax return. 1040 x form See Table 1 on page 5 for the line number for years before 2002. 1040 x form 2       3 Enter the following taxes, if any, shown on the decedent's income tax return. 1040 x form (These taxes are not eligible for forgiveness. 1040 x form )           a Self-employment tax. 1040 x form 3a         b Social security and Medicare tax on tip income not reported to employer. 1040 x form 3b         c Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). 1040 x form 3c         d Tax on excess accumulation in qualified retirement plans. 1040 x form 3d         e Household employment taxes. 1040 x form 3e         f Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. 1040 x form 3f         g Tax on golden parachute payments. 1040 x form 3g       4 Add lines 3a through 3g. 1040 x form 4       5 Tax to be forgiven. 1040 x form Subtract line 4 from line 2. 1040 x form 5       Note. 1040 x form If the total of columns (A), (B), and (C) of line 5 (including any amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C. 1040 x form Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. 1040 x form If filing Form 1040X for an eligible year, enter the amount from line 5 above on Form 1040X in column B of line 10 as a decrease in tax. 1040 x form The IRS will determine the amount to be refunded. 1040 x form Worksheet A. 1040 x form Figuring the Tax To Be Forgiven (For Decedents Who Filed a Return as Single, Married Filing Separately, Head of Household, or Qualifying Widow(er))         (A) First Eligible Year (1994 or 2000) (B) Second Eligible Year (1995 or 2001) (C) Third Eligible Year (1996 or 2002) 1 Enter the years eligible for tax forgiveness. 1040 x form 1       2 Enter the total tax from the decedent's income tax return. 1040 x form See Table 1 on page 5 for the line number for years before 2002. 1040 x form 2       3 Enter the following taxes, if any, shown on the decedent's income tax return. 1040 x form (These taxes are not eligible for forgiveness. 1040 x form )           a Self-employment tax. 1040 x form 3a         b Social security and Medicare tax on tip income not reported to employer. 1040 x form 3b         c Tax on excess contributions to IRAs, Coverdell education savings accounts (formerly Ed IRAs), or Archer MSAs (formerly medical savings accounts). 1040 x form 3c         d Tax on excess accumulation in qualified retirement plans. 1040 x form 3d         e Household employment taxes. 1040 x form 3e         f Uncollected social security and Medicare or RRTA tax on tips or group-term life insurance. 1040 x form 3f         g Tax on golden parachute payments. 1040 x form 3g       4 Add lines 3a through 3g. 1040 x form 4       5 Tax to be forgiven. 1040 x form Subtract line 4 from line 2. 1040 x form 5       Note. 1040 x form If the total of columns (A), (B), and (C) of line 5 (including any amounts shown on line 15 of Worksheet B) is less than $10,000, also complete Worksheet C. 1040 x form Attach the computation of the tax to be forgiven or a copy of this worksheet to the decedent's final income tax return or amended tax return (Form 1040X) for each year listed on line 1. 1040 x form If filing Form 1040X for an eligible year, enter the amount from line 5 above on Form 1040X in column B of line 10 as a decrease in tax. 1040 x form The IRS will determine the amount to be refunded. 1040 x form Useful Items - You may want to see: Publication 547 Casualties, Disasters, and Thefts 559 Survivors, Executors, and Administrators Form (and Instructions) 706 United States Estate (and Generation- Skipping Transfer) Tax Return 1040 U. 1040 x form S. 1040 x form Individual Income Tax Return 1040NR U. 1040 x form S. 1040 x form Nonresident Alien Income Tax Return 1040X Amended U. 1040 x form S. 1040 x form Individual Income Tax Return 1041 U. 1040 x form S. 1040 x form Income Tax Return for Estates and Trusts 1310 Statement of Person Claiming Refund Due a Deceased Taxpayer 4506 Request for Copy or Transcript of Tax Form Prev  Up  Next   Home   More Online Publications
Print - Click this link to Print this page

Principal Reduction Alternative Under the Home Affordable Modification Program

Background


To help distressed homeowners lower their monthly mortgage payments, the U.S. Departments of the Treasury and of Housing and Urban Development established the Home Affordable Modification ProgramSM (HAMPSM) for mortgage loans that are not owned or guaranteed by Fannie Mae or Freddie Mac.

Under HAMP, a participating loan servicer must consider a sequence of modification steps for each eligible homeowner’s mortgage loan until the loan’s monthly payment is reduced to 31 percent of the homeowner’s verified monthly gross (pre-tax) income. Sometimes, a change in the mortgage loan’s interest rate is sufficient to reach the 31–percent target. Sometimes additional modification steps of term extension or forbearance are necessary as well. See the Home Affordable Modification Program (HAMP) page on the MakingHomeAffordable.gov website.

(For mortgage loans that are owned or guaranteed by Fannie Mae or Freddie Mac, eligible homeowners may be offered modifications under related programs also called “HAMP.” Because these related programs do not contain the principal reduction provision that these FAQs address, these FAQs use the term “HAMP” to refer only to the program for mortgage loans that are not owned or guaranteed by Fannie Mae or Freddie Mac.)

Since the last quarter of 2010, if a mortgage loan is being considered for a HAMP modification and if the ratio of the amount owed to the value of the home is greater than 115 percent, then the servicer must consider whether a Principal Reduction AlternativeSM (PRA) principal reduction should be effected as one part of the HAMP modification. See the Principal Reduction Alternative (PRA) page on the MakingHomeAffordable.gov website. 

For HAMP modifications that include a PRA principal reduction, the unpaid principal balance of the modified loan is divided into an interest-bearing principal amount and a non-interest-bearing PRA Forbearance Amount. If the homeowner then achieves a payment history that is sufficiently timely over a three-year period, the entire PRA Forbearance Amount is eventually reduced to zero. 

In connection with every HAMP modification of a loan that is not owned or guaranteed by Fannie Mae or Freddie Mac, to encourage participation in HAMP, the government provides incentives to the investor (that is, the holder of the loan), to the homeowner, and to the servicer. If a HAMP modification of such a mortgage loan includes a PRA principal reduction, the government makes additional incentive payments over three years to the investor. (These additional incentives are called “PRA investor incentive payments.”) The size of the PRA investor incentive payments depends not only on the amount of principal reduced but also on the loan-to-value ratio and the loan’s payment history before the HAMP modification. The PRA investor incentive payments range from 6% to 21% of the principal amount reduced.

For information on tax issues related to the Principal Reduction Alternative, see the questions and answers below.
 


Questions and Answers on Tax Issues Related to the Principal Reduction Alternative


Q1: If the government makes a PRA investor incentive payment to the holder of the mortgage loan, how is that payment analyzed for federal income tax purposes?

A1: The PRA investor incentive payment to the holder is treated as a payment on the loan by the government on behalf of the homeowner. 

Q2: Does a homeowner have income as a result of the government's having paid some of the homeowner’s mortgage loan by making a PRA investor incentive payment to the holder of the loan?

A2: No. This payment by the government on behalf of the homeowner is excludible from the homeowner’s income under the general welfare exclusion. Excluding this amount from the homeowner’s gross income is consistent with the treatment of Pay-for-Performance Success Payments, which are addressed in Revenue Ruling 2009–19

Q3: In a HAMP modification that includes a PRA principal reduction, the holder of the loan reduces the PRA Forbearance Amount by more than the PRA investor incentive payments (which are treated as payments on the loan on behalf of the homeowner). What federal income tax consequences for the homeowner result from that additional reduction by the holder?

A3: To the extent that the reduction in the PRA Forbearance Amount is more than the PRA investor incentive payments, the reduction is from the discharge of indebtedness. The full amount of this discharge of indebtedness is reported to the IRS and the homeowner on Form 1099–C, Cancellation of Debt, regardless of whether the homeowner may exclude any, or all, of it from gross income. See Questions 4 and 5 below for discussion of some exclusions that may apply.

Q4: Does the exclusion for qualified principal residence indebtedness apply to amounts discharged under a PRA principal reduction?

A4: The exclusion for qualified principal residence indebtedness may apply to a discharge of indebtedness under a PRA principal reduction if the amount discharged meets the criteria for qualified principal residence indebtedness. Under current law, this exclusion does not apply to discharges that occur after Dec. 31, 2013. For further discussion of the qualified principal residence exclusion, see the questions and answers on the The Mortgage Forgiveness Debt Relief Act and Debt Cancellation page.
 

Q5: Does the insolvency exclusion apply to amounts discharged under a PRA principal reduction?

A5: The insolvency exclusion may apply to a discharge of indebtedness under a PRA principal reduction to the extent that the taxpayer is insolvent when the discharge occurs. For further discussion of the insolvency exclusion, see page 4 of Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals).

 

Page Last Reviewed or Updated: 06-Feb-2014

The 1040 X Form

1040 x form Publication 225 - Additional Material Prev  Up  Next   Home   More Online Publications