The most dreaded time of the year starts in January and ends April 15th. This time entails the filing of W-2’s and 1099’s. Sitting at a desk, biting one’s nails, waiting to see what the final numbers are. It’s tax time again.
Since taxes never go away but incomes tend to change, tax debt has a real possibility of creeping into an otherwise okay life. When this happens, you do not have to panic. There are seven ways to obtain tax relief.
Be an Expert in Deductions
Deductions are the Internal Revenue Service’s gift to all taxpayers. Deductions are ways to essentially “write” off something you don’t want to show as income. With deductions, a person’s tax liability is reduced and their return is higher.
This is especially important for people who have chosen the path of self-employment. For example, a freelance writer may work from home but they still need supplies. These supplies are expenses, therefore, they count as a deduction. At the end of each year, it is an excellent idea to start fresh and organize any papers and receipts. Do some research, talk to a tax professional, and learn what deductions are available. Whether one is self-employed or employed by a company, deductions are vital to getting the most out of what is paid in through taxes. To become the deduction expert, start by visiting the IRS website for a complete list.
Examine Documents for Errors
Never fear, the IRS will contact you about any errors they have found and the penalties involved. When this happens, take time to examine your tax documents carefully. Look over them with a fine-toothed comb. It never hurts to put more than one set of eyes on the documents that determine what you may owe.
If you doubt your skills to examine tax documents and identify potential problems, contact someone who is more qualified. Have a friend or even a tax professional look over them. A quick glance could mean the difference between a few hundred dollars and thousands of dollars.
According to an article on Supermoney.com, Americans owe $458 million dollars in back taxes. With this much being owed, the IRS understands that they may not get all of that repaid. People are under hardships which include financial instability. With that being said, debt reduction becomes a practical way to obtain tax relief.
A debt reduction is when the IRS determines a person cannot pay the entirety of what they owe and therefore reduces the amount owed. Contacting and clearly explaining your financial situation is the first step. It’s not impossible for the IRS to reduce the amount you owe in order to get some of their money back. Of course, the IRS wants as much as possible so be realistic when asking for a debt reduction.
Inquire About a Payment Plan
Payment plans work just as they do when you buy a house or takes out a loan. Owing back taxes can result in owing a large chunk of money. For most, it is impossible to pay all they owe in a lump sum.
Working with the IRS to obtain a payment plan will allow a person more time to pay off accrued debt. Be aware there is a user fee for this service but the perks far outweigh the fee. Payment plans will allow a person to not accrue interest on the amount owed as wells as no more offset on refunds.
Ask for Penalty Relief
Having debt is hard enough, but when interests and fees begin to take one deeper into the debt pool, it can be overwhelming. There seems to be no way out. Luckily, there is an option. Asking for penalty relief means a person is wanting forgiveness of any fees and penalties that have accrued on the initial sum they owed. Basically, a person wants to pay what they owe, not what has been added to that amount.
Asking for penalty relief will require one to prove their case. Just like writing a hardship letter, a person should be clear and concise about their situation. Explain everything and about why paying back your debt would create hardship. In the end, one can have any penalties or fees removed.
Credit Card Consolidation
There are times when a person will need to make the hard choice of using a credit card to consolidate their tax debt. This may not be someone’s first choice, but instead, it’s their only choice. If this is what has to be done, choose a credit card, not a settlement company, to pay your tax debt. Check on the interest rates and make sure this choice will not be far worse than the tax debt that is presently accruing.
Speak to a Tax Professional
All the previously read tax relief choices are good but none are as important as this one. Tax professionals are experts in all things IRS related. They know all the loopholes and ways available to help people avoid or get out of tax debt. Taking the time to speak to a tax professional is priceless. Not only will you learn how to avoid mistakes but also how to fix them.
A word of caution should be stated though. When choosing a tax professional to speak with, make certain they are legitimate. There are a lot of scams out there and companies wanting to take your money. One way to combat this is to check out the articles on taxreliefprofessional.com. This site does an excellent job of helping people know what to look out for when searching for help.
Having tax debt and getting relief does not have to be stressful. There are ways to get help, you just have to ask. The above-mentioned options are available to any and all that meet eligibility requirements. Never be afraid to ask for help in this situation. The help is out there, take advantage of it. Tax debt doesn’t have to rule your life. Contact the Tax Relief Professionals today to get on the path to becoming tax debt-free.