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Federal Income Tax
Senate panel backs extension of mortgage debt relief law

WASHINGTON — Here's some encouraging news for financially stressed homeowners across the country: The Senate Finance Committee has approved a bipartisan bill that would extend the Mortgage Forgiveness Debt Relief Act through 2013. Why is this important? Several reasons: The debt relief law spares homeowners who receive principal reductions on their mortgages from being hit with hefty federal income taxes on the amounts forgiven. Without it, millions of owners who go through foreclosure or leave their homes following short sales would experience even more financial stress. The law, which is set to expire Dec. 31, has also provided relief to thousands of people who have debt...

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