The Mortgage Forgiveness Debt Relief Act of 2007 allows homeowners to exclude a portion of their qualified principal residence indebtedness. The IRS defines a principal residence as the home where a person lives most of the time. The phrase "qualified principal residence indebtedness" refers to a mortgage used to buy, build, or substantially improve a principal residence.

Some other changes in the tax regulations that may benefit you include the following:

✔ You may now be able to deduct up to $5,000 for an IRA contribution, and up to $6,000 if you will be 50 years old or older by the end of 2008. You may also be able to deduct an additional $3,000 if you participated in a 401(k) plan and your employer was in bankruptcy during a previous year.

✔ Rates for business mileage deductions have increased from 48.5 cents per mile to 50.5 cents per mile.

✔ You may deduct 19 cents per mile for mileage related to medical or moving purposes.

✔ You may deduct 14 cents per mile for driving on behalf of a charitable organization.

Some of the tax provisions that were scheduled to expire at the end of 2007 include:

✔ The deduction for qualified tuition and fees

✔ The credit for non-business energy property

✔ The exclusion from income of qualified charitable distributions

✔ The itemized deduction for state and local general sales taxes

IRS regulations concerning allowable tax deductions can be very complicated and difficult to understand. It is better to consult with a reputable tax professional than to assume anything incorrectly and make a mistake on your tax return. A licensed Certified Public Accountant (CPA) can be a reliable source of tax information and assistance. You can also obtain help from the IRS by calling 1-800-829-1040.