Taxes can be a burden, especially for people with low and moderate incomes. However, the IRS always provides a solution to ease your financial stress.
In this article, we’ll talk about tax relief programs offered by the IRS.
What is IRS Tax Relief?
Many US citizens may be unable to pay their taxes for various reasons. That’s why the IRS has tax relief programs to reduce the taxes. Individuals or businesses can use one of these programs to settle their tax debts. On a related note, tax relief may also be a targeted program that benefits certain taxpayer groups. For example, the government can offer solutions to help taxpayers affected by natural disasters such as hurricanes, severe storms, forest fires, Coronavirus, else.
First, let’s remember some terms that may be confusing.
- Tax deductions are expenses you can subtract from your AGI (Adjusted Gross Income) to arrive at your taxable income. In most cases, if you have a lower payment, your tax will probably be lower.
- The standard deduction is a fixed amount that all taxpayers may subtract from their income before applying income tax. However, age, disability, or dependency on someone else’s income tax return may impact the standard deduction. Besides, its amounts change every year due to inflation adjustments.
- Itemized deductions are expenses the taxpayer incurred that may reduce taxable income—medical expenses, property taxes, mortgage interest, else. These expenses are deducted from your AGI.
- Tax credits are payments taxpayers claim to reduce the income tax they owe. The government provides two types of tax credits: Child Tax Credit (if you’re responsible for at least one child) and Working Tax Credit (if you work for a low income).
- Tax exclusions reduce your taxable income and tax bill as non-taxable—such as retirement income, federal subsidies, child support payments, insurance benefits.
Tax credits can reduce the amount of tax you owe. However, tax deductions can reduce the amount of your taxable income.
Feeling Overwhelmed?
Tax Relief Programs Offered by the IRS
Fresh Start Initiative
The Fresh Start Program was created in 2011. This program provides tax relief to taxpayers who owe much more than they can reasonably afford to pay. Taxpayers who apply and are considered eligible can significantly reduce their federal tax debt, sometimes by 90% or more.
There are four main programs available to taxpayers through the Fresh Start Program:
-
Offer in Compromise
It’s an agreement with the IRS. In this program, you’ll pay less than the total amount you owe. However, first, you should figure out whether you’re eligible for an Offer in Compromise.
-
Installment Agreements
An IRS payment plan or installment agreement lets you pay tax debt over an extended period.
-
Penalty Abatement
It relieves specific penalties If you’ve already tried to pay your tax debt but couldn’t. However, check out if you’re eligible or not.
-
Currently Non-Collectible Status (CNC)
Unlike the other programs, CNC is a status symbol. It stops collection activities for people in financial hardship situations until their situation improves.
Conclusion
When filing your taxes, find the most proper tax relief program based on your financial situation. However, it’s hard to have complete knowledge about the programs. For this reason, consult a tax attorney to do this most accurately.
Are you having trouble paying your taxes? No worries! We know how to deal with the IRS.
Just contact us, and we’ll help you find the best solution depending on your tax difficulties.
