New Tax Breaks for Turbulent Times

As the recession drags on and taxpayers struggle to cough up their due to Uncle Sam, the Internal Revenue Service is playing an unusual new role: Mr. Nice Guy.

Indeed, to ease the burden on folks who have lost jobs or seen home and investment portfolios plummet, the agency is reducing monthly payments on back taxes and delaying collection actions. Here are some of the newest breaks and credits for last-minute filers:

Buyers who haven't owned a home for the past three years and bought between Apr. 8 and Dec. 31, 2008, can score up to $7,500 back on this year's return. But there's a catch: Uncle Sam wants that money back -- repaid over 15 years or all at once if you sell. Those who buy between Jan. 1 and Nov. 30, 2009, can get up to $8,000 back on either their 2008 or 2009 return, which they won't have to pay back if they live in the home for at least three years.

Didn't receive the full $600 "economic stimulus payment" in 2008? Your income was probably too high in 2007 to qualify. But if you were one of the more than 4.4 million people who lost their job since the Recession began or otherwise saw their income drop, you could qualify for up to $600 in a "recovery rebate credit." A special calculator on the IRS Web site, IRS.gov, helps determine whether you qualify and for how much.

When the tech bubble popped earlier this decade, thousands of workers who held incentivizing stock options were hit with a hefty alternative minimum tax. Problem is, that levy can sometimes cost employees much more than the actual value of the declining shares. Fortunately, last year's bailout bill now provides some credit for anyone who's been in a similar situation (not just the tech brigade) -- while those still unable to pay are essentially off the hook, says Joseph Wallin, a Seattle-based tax lawyer.

There's also a modest silver lining for anyone who had their home foreclosed on or their mortgage restructured last year. In the past, any forgiven debt would have been taxed. That's no longer the case if the balance on the loan is less than $2 million.