DEAR BRUCE: I have been retired for seven years. Recently I received a letter from the IRS saying I owe taxes for income not claimed in 2008 in the amount of $5,000. Since I was already retired five years when they say I earned this money, obviously something has been entered wrong somewhere. The only income that I have is my Social Security, and that hasn't changed. It also talks about some pension plan that I have been receiving money from as well from a company I have never heard of. My accountant has sent letters to the IRS, but apparently they never look at any correspondence that they receive because months after sending in the information to them, I am still getting letters. How can I fix this problem once and for all? I would appreciate any help you can give me. — W.R., via e-mail

DEAR BRUCE: I have been retired for seven years. Recently I received a letter from the IRS saying I owe taxes for income not claimed in 2008 in the amount of $5,000. Since I was already retired five years when they say I earned this money, obviously something has been entered wrong somewhere. The only income that I have is my Social Security, and that hasn't changed. It also talks about some pension plan that I have been receiving money from as well from a company I have never heard of. My accountant has sent letters to the IRS, but apparently they never look at any correspondence that they receive because months after sending in the information to them, I am still getting letters. How can I fix this problem once and for all? I would appreciate any help you can give me. — W.R., via e-mail

DEAR W.R.: Obviously an error has been made on the part of the IRS, which can and does happen. Someone has punched in information that might belong to another party. I would make a few phone calls in lieu of sending any more correspondence. While many things can get lost in a system, it would be much more difficult for that to happen on a one-on-one appointment at an IRS office, which is not difficult to arrange. Get all of your documents in order and sit down with them until you are satisfied.

DEAR BRUCE: My husband's mother had taken out two mortgages on his home. The deed has my husband Jim's name, his deceased wife's name and his mother's name. His mother is in a nursing home, and the nursing home takes all of her Social Security income. We currently live in the home and have attempted to make the payments on both mortgages for the past two years, but we are behind on both. The monthly payment is more than $700. The value of the home is about $80,000 but the mortgages total $85,000. My husband is self-employed and rents his shop for $200 a month from his $10,000 per year income. I receive $867 from Social Security Income. We are not responsible for both mortgages, but we live in the house. If the house goes through foreclosure, will the fact that Jim's name is on the deed affect us? — Suzanne, via e-mail

DEAR SUZANNE: Seek counsel to be certain you are on solid ground. Since the mortgages are only in your mother's name, you are correct in your observation that you have no responsibility. Clearly, you are underwater by at least $5,000 and probably a good deal more when you add selling expenses. You indicate that your payment is $700. Where are you and your husband going to live for that relatively modest sum? Perhaps you could find a place in your area but that is something to be considered. The first thing I would do is contact the mortgage company. Explain the circumstances that the mortgage is against the home that is underwater and that the individual whose name is on it is now in a nursing home and has no income other than Social Security, which they cannot attach. It may very well be that they would be willing to negotiate some kind of a deal. I would by all means pursue that.

Send your questions to: Smart Money, P.O. Box 2095, Elfers, FL 34680. E-mail to: bruce@brucewilliams.com. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.