Some New Changes To The IRS Tax Relief Programs

The Internal Revenue Service( IRS) declares that it will loosen its taxation debt relief programs so that more and more delinquent taxpayers can approach for a agreement be paid by their back taxes. This has come as boon to the financially strapped piles. One of the most successful debt relief programs of the IRS which is known as' Proposal in Compromise' has been modified to fulfill the demands of the people.

A brief outline about programs like these will give a better revelation regarding the viability of the initiatives taken up by the IRS.

IRS debt relief programs

The IRS has come up with various programs that will cater to the taxpayers as per their financial necessity and add them easing from their federal indebtedness 😛 TAGEND

1. Offer in Compromise or OIC – According to the recent modification to the OIC program, the IRS has pledged to accept a repayment volunteer of at the least a year and maximum of 2 years income made by the taxpayers. This is a great relief from the previous the principles of the rule of maximum 5 years of income payable as a agreement under the same OIC program. It has been said that the IRS will consider a taxpayer's monthly revenues and his affordability to repay the back taxes when deciding the repayment sum. The IRS has enlarged its mistrust as to collectibility or drawback criteria for this purpose.

Moreover, an OIC program is the most suitable debt relief option for people who can't make full tariff remittances, be it in installments or as a lump sum extent. Hence, the IRS has decided to collect taxes merely after one has met all his monthly obligatory expenses.

2. Currently Not Collectible or CNC – Majority of the OIC applicants are ineligible for the programme. So, for them the IRS has drawn up a few more options that can reduce their tariff responsibility. Taxpayers who own owneds with good equity and have retirement savings or any other treasured assets but don't have a continuous source of income are eligible for the CNC program. The IRS awards such taxpayers a CNC status that will give them relief from any kind of tax collection wars from the IRS for a specified time period. Nonetheless, the IRS may liquidate assets like mutual funds speculations, savings accounts, attachments and capitals before awarding the CNC status on someone. As per the CNC conventions, the statute of limitations remains effective till the time a taxpayers has recaptured his monetary security.

Apart from that, the IRS has the right to get a charge lien swiped on a person on whom the CNC status has been bestowed. Hence, taxpayers should choose either of the two excise debt relief programs after consulting an experienced duty advocate who can give them announce legal advice based on their individual financial needs.

3. Installment Agreement – It's quite raging that most of the OIC employments are rejected by the IRS. This is because the IRS found something misinform in those applications or the works were not fill up properly as per the IRS specifications. Therefore, taxpayers can study alternative options like Installment Agreement to get themselves out of the tax pays. Under these treaties, the IRS countenances a taxpayer to repay his pay unfolded over a significant amount of age that may be as long as 5 years or more.

People who have taxation indebtednes that is under $25,000 can approach the IRS to repay the amount along with the best interest accrued in 5 years hour. At this point, taxpayers should take the assistance provided by tax advocates to decide their refund capacity within the said period( 5 years ). In suit, one cannot realize the terminated fees, then he/ she can surely apply for a partial installment accordance. Nonetheless, its external debt quantity must be above $25,000 to be eligible for this debt relief program.

It is very important to note that IRS rehabilitates its aggressive accumulation endeavours once a taxpayer's IRS debt has intersected the $25,000 score. The IRS does not even permit such taxpayers to offer those amounts in 5 years. As an expression of the results of this aggressive sentiment, numerous taxpayers are left with exclusively a negligible amount of money to use them for daily crucial expenses.

A Guide to Understanding Tax Debt & Bankruptcy

Financial pressure quickly mounts for individuals who owe substantial amounts of taxes and back taxes. People often ask, does filing bankruptcy for tax debt provide you with real relief? Does bankruptcy discharge back taxes? Is filing chapter 7 or chapter 13 bankruptcy the better approach? In this guide, these important questions will be addressed to help provide you with a clearer understanding of all matters related to tax debt and bankruptcy.

One major misconception is that filing bankruptcy on taxes does not work, and that taxes are never discharged. That's actually not the case. When a specific set of criteria are met, then filing bankruptcy on tax debt actually does work, meaning that you're able to successfully discharge those taxes.

However, in most cases, only income tax can be discharged, not other IRS tax debts such as payroll taxes, or penalties. Of course, there are always specific conditions, circumstances and so forth which must be met, and in many cases, there are exceptions to the rules.

Conditions that must be met include a range of issues, but importantly that there was no fraud or tax evasion involved, and that a tax return was filed. The back taxes owed must also be at least three years old. This makes the timing of filing bankruptcy on taxes tricky for individuals, and is one of the major reasons why discharging tax debt does not work for many people.

When the appropriate conditions are met, taxes can be discharged. Even they cannot be discharged based on the circumstances, filing bankruptcy may still provide substantial relief The good news is that, yes, bankruptcy still may help provide you with serious financial relief depending on your circumstances.

For instance, if you file chapter 13 bankruptcy, taxes that are not eligible for discharge may be repaid interest and penalty fee over as long as 60 months. In Chapter 13, a single monthly repayment plan is created, giving you something more manageable, and allowing you time with a realistic approach to pay off debts and get back on track. Otherwise, by filing chapter 7 bankruptcy, you may at least be able to achieve freedom from other debts you may have, allowing you to more easily pay back your taxes.

Of course, it's always important to consult with an experienced bankruptcy attorney before deciding to file, or to seek out other potential alternatives and viable solutions. As mentioned, there are many different conditions and circumstances which may apply, and you'll want to carefully analyze your entire financial picture before moving ahead with tax debt and filing bankruptcy.

How to File a Successful Offer in Compromise With the IRS

Filing an offer in compromise is an excellent way to significantly reduce your delinquent taxes with the Internal Revenue Service. However it is not as simply as just filing out a few forms. To be successful with an Offer in Compromise you must plan ahead and pay close attention to the details.

The first step in being successful is to actually determine if you qualify under this program. I know that this sounds simply enough but to determine your eligibility is no simple matter. As it can take an individual over 20 hours to determine if they simply qualify under the program.

To determine if you qualify you may have to complete IRS Form 433 or 433-A, and these forms can be very time consuming. These forms will requires that you disclose all of your financial information. This includes all of your bank account information such as names, addresses and account numbers of all of your bank accounts. In addition you must provide three months statements on each account.

You will also have to disclose information on your vehicles such as VIN Number, fair market value and the balance of your auto loan. In addition if you own any real estate you will also have to disclose the fair market value of your real estate and the balance of your house mortgage.

This is just a sample of the information that has to be provided to the Internal Revenue Service that they will use to determine if you even qualify for the Offer in Compromise Program.

However before you submit an offer to the taxing authorities you should know if you even qualify or not because there are steps that you can take in order to qualify.

For example, lets take John Smith who owes the government $25,000 in back taxes. John does own a house or have any investments but he does have $23,000 in a savings account and a 10 year old vehicle that has a 128,000 miles on it. If John were to simply submit an offer to the IRS with the above information they would not approve the offer and take the full $23,000 from John's bank account.

However if before submitting the offer, John purchased a new vehicle for $30,000 by using the $23,000 in his savings account and taking out an auto loan for $7,000. This would allow John to shelter a large percentage of his asset from the offer in compromise calculation and John would be a more favorable candidate to be approved for an OIC.

Preparing a successful offer in compromise is extremely time consuming and technical in nature. If you have delinquent taxes with the IRS and want to settle by making an Offer, then you should seek the professional assistance of an experienced professional such as the author of this article.

Positives and Negatives of Filing Online Tax Returns

It seems everyone is talking of filing taxes online these and Why Not? Online option of filing taxes provides ease and convenience to hundreds and thousands of tax payers. As the popularity of online tax return options grows, so does the need to learn how to file these taxes online. Many people are aware that there is an option available to them through which they can file their tax returns online but they are still not aware how to do it. Still every year the number of online tax return submissions is growing rapidly both at Federal and State levels.

Before people decide whether to file their tax returns online they want to be made aware of positives and negatives of the process. Surely, this way is much more convenient but nothing becomes without its short comings. We should learn and be aware of exactly what things should be avoided while making use of the online option so that we void any mistakes.

Let us begin on a positive note and highlight pros of filing your tax online electronically:

a. While filing online the returns are submitted almost instantly and reaching IRS authorities. One can easily avoid hassle of preparing lot of paperwork and then using postal service to deliver your packet to the concerned authorities on time. The flow of information is faster and with much more ease compared to the traditional method.

b. The Tax refunds are received at much faster pace. Sometimes within 8 days of filing your return you can receive your tax refunds.

c. This method is much cheaper than the manual method.

d. The online filing system also has inbuilt check and correction methods which would mathematically check your submissions and make you aware of mistakes if there are any.

Listed below are some of the negatives of online filing of tax returns:

a. There may be a fee attached to preparation and filing of returns online. There are many software programs available for free which will help you with your Federal Tax returns but while filing your State returns online you will have to buy some of the software solution. The cost of such software would be in the range of $ 35 to $ 40.

b. Secondly, not all the people are proficient in handling and navigating computer software. For those who are not that computer savvy it becomes difficult to handle various files and folders and may need assistance or training in doing so. They may also make some silly mistakes due to their ignorance to handle the system.

Turn Paying Your Children Into a Tax Deduction

Owning and running a business can be rewarding and challenging. Over the years we have noticed that many business owners utilize their spouses and children. If you have children old enough to perform a task, you know what we mean. Not only is it cost effective to have your children help but many times it is a way to spend quality time together and to teach your children values like hard work and helping one another.

What many people don't realize is that while you are spending time with your children and teaching them, you can also create a legitimate tax deduction. This means that you are allowed to pay each child a certain amount each year for helping you in your business. There are some specific guidelines you must follow. You must pay them according to their age and you must pay them according to the task performed. For example, you can't pay the 5 year old $2000 for emptying the trash in the office one time. There are also specific rules on how to keep track of what each child does and how you can pay them. You must keep a log of the day, time, activity, and how much you paid them.

Although there are specific guidelines to follow, there is a wide range of what you can pay your children to do. We have seen construction workers take their children to help with clean up. We have seen realtors have their children help deliver flyers. We have seen day care providers have their children help with cleaning and preparation. We have even had a vet pay his daughter to come in and help feed and care for the animals.

Another thing to realize when paying your children is sometimes their wages are not subject to Income, Social Security, or Medicare taxes, meaning you pay them 100% of their wages with no taxes taken out. This happens if you meet the following guidelines:

  1. If you pay your children from a partnership or a sole proprietorship, those wages are not subject to Social Security or Medicare tax.
  2. They make less than the standard deduction for single individuals; those wages are not subject to Income Tax.
  3. They are under 18 years old.

Paying your children is another way of deducting money you are already going to pay out. How many times have you told your children that if they help you with a task you will buy them that pair of designer jeans or pay for Little League? Instead, pay your children so it becomes their money and a tax deduction. Then you can have them put their money in a savings account, pay for school fees, clothes, etc. You undoubtedly want to pay your children to help you. Why not put in a little more effort and make it tax deductible?