Back taxes are the fully or partially unpaid taxes you owe to the local, state, or federal government from the previous year. While some taxpayers intentionally choose not to pay taxes, many fall behind unintentionally due to financial hardships.

Here are three ways to get relief from back taxes.

1. IRS Payment Plan (Extension)

If you need an extension to pay your taxes, the Internal Revenue Service (IRS) can provide you a short-term or long-term payment plan.

Short Term Payment Plan: The maximum debt is $100,000 in combined tax, penalties, and interest. You can apply for this extension online, by phone, or in-person for a $0 fee and pay by debit/credit card, check, money order, or checking account.

Long Term Payment Plan: The maximum debt is $50,000 in combined tax, penalties, and interest.

1. Payment via Automatic withdrawal: $31 to apply online; $107 to apply by phone, mail, or in-person. (Fees waived for low-income applicants.)
2. Payment via any other method: $149 to apply online; $225 to apply by phone, mail, or in-person. (Fees reduced to $43 for low-income applicants)

2. Offers in Compromise

This is the most appealing option for people with tax debts. In this option, the IRS allows you to settle the tax debt less than what you currently owe, known as Offers in Compromise.

For getting an offer in compromise, you have to show that you can’t pay your taxes at all or that paying the debt will cause you financial hardship.

To determine your status, IRS will check your income, expense, ability to pay, and assets. There are no penalties involved; however, you will have to pay a $186 application fee and an initial payment (first monthly payment or 20% of the current debt amount).

Please note that the IRS accepts less than half of the offers in compromise that it receives, meaning you cannot expect your application to get accepted.

Qualification: You can’t apply if you are back on tax returns or in an open proceeding for bankruptcy.

3. Get a Currently Not Collectible Status

If you can’t pay tax because of financial hardships, you can ask the IRS to change your account status to ‘Currently not Collectible.’ You will have to fill up a Collection Information Statement to show that your condition is as bad as you say it is. You will also have to submit monthly income and expense documents.

If the IRS decided to fit this criterion, understand that it’s only temporary as your debts won’t just disappear. During this time, the IRS will not take any aggressive tax collection tactic against you. However, during this time, your tax debt will keep collecting interest and penalties that can add up to a significant amount.

IRS may check your income annually to ensure your financial hardships and even file a tax lien against you.

Ask a Tax Specialist How You Can Reduce Your Debt By Up To 75%

If you are confused about which relief will suit your needs, you should contact a tax specialist. These laws and policies can be complicated, and a professional can help you find the right option for getting rid of these back taxes.

Benefit Tax Group is proud to represent people and help them get the relief they need. If you want to get a free consultation explaining what we can do for you, please call us now at (800) 381-8816. You can also fill out our contact form.

Taxation is as old as currency itself. However, one element of taxation that has changed significantly in the modern era are the various ways we can reduce our taxable income. It makes our wallets a little heavier and life that much easier.

But considering the complex web that the modern taxation policy has become, saving on taxes is not easy. It requires an astute understanding of different tax policies and laws. That’s why tax experts are so highly revered and always in-demand.

If you are looking for some tips on how to reduce your taxable income, this blog will certainly help you. Follow the tips and strategies we share below and save more on your taxable income.

#1. Fill Out Your W-4 Wisely

More often than not, employees end up taking a lower paycheck because they are not filing their W-4 form accurately. They end up allowing their employers to withhold and transfer a big chunk of their paycheck to the IRS.

The rule of the thumb says that you claim more to save more on your W-4. But at times you may have to do the opposite as well. You can update your W-4 anytime and should consult an expert to determine which method is right for you.

#2. Invest in a Retirement Account

Isn’t it great to save on your taxable income while also saving for a dream retirement? That’s exactly what a retirement account does for you. The federal tax law approves a range of retirement plans that are eligible for deductions. As a taxpayer, you should make the most of these plans.

#3. Open a Health Savings Account

If there are any lessons that we can take forward from the year 2020, one is certainly that we need to be prepared for a health crisis. If anything, health security should be on top of our priority list. And there is no reason to not do it when you can open a health savings account and use it to reduce your taxable income.

#4. Claim Business Deductions

If you are self-employed then you can claim a long list of deductions. For instance, you can write off your health insurance premium; office expenses (e.g. rent, utilities); car expenses and mileage; and many other bills as business expenses. Moreover, there are a variety of retirement savings plans that self-employed individuals can take advantage of to lower their taxable income considerably.

#5. Don’t Forget Tax Credits

Tax credits are simply must-use if you want to save on your tax bills. They reduce tax liabilities dollar-for-dollar which means they are applied directly to the tax amount, unlike deductions that apply to the total income. If you use tax credits wisely your net tax liabilities may even be reduced to zero.

Want To Reduce Your Taxable Income?

Benefit Tax Group is here to help you. We know how complex and confusing the tax laws and policies can be. That’s why we make sure that you get the best tax consultation. We are a group of industry professionals who make sure that you never have to pay extra and you always save more.

If you want to get a free consultation explaining what we can do for you, please call us now at (800) 381-8816. You can also fill out our contact form.

Tax debt is stressful and can be a financial burden that you’re unable to repay. The IRS has a number of ways to extract money from you. One of the most devastating weapons in the IRS arsenal is wage garnishment, which can reduce your take-home pay by as much as 25%. Would you be able to pay your bills? This is why it’s so important to speak with a tax debt professional to determine your options for resolving your tax issue. Below, you will learn several important items about mitigating tax debt: specifically, when the IRS agrees to reduce tax debt and what you can do if it isn’t reduced.

How Do I Get My IRS Debt Forgiven?

Not everyone is aware of this, but IRS tax debt can in fact be dramatically reduced or even completely forgiven. The most typical method of reduction is an Offer in Compromise, which is an agreement between you and the IRS regarding how much of the debt you’re able to pay off. It’s not in the IRS’s best interest to try collecting money that they’ll never actually see, so an Offer in Compromise is a way for you to pay what you can while not being financially ruined.

What If I Can’t Get My Debt Reduced?

There are several paths available to you if the IRS refuses to lower your debt. One is to file an appeal, explaining why you believe the judgement was made in error. It’s extremely valuable to secure a specialized representation when making this argument this to the IRS, as this person will be able to make the present your case in a manner which the IRS is receptive. As well, you may be able to set up a payment plan with the IRS. While this doesn’t make the debt go away, it does reduce the shock and help you pay back the debt over an extended period of time.

Finally, you may qualify for “Currently Not Collectible” (CNC) status, which means the IRS has determined that you do not have the financial wherewithal to pay your tax debt. Although CNC does not eliminate your tax debt (at least not immediately), it will prevent the IRS from initiating collection actions (wage garnishment, bank levy, property seizure, etc.) and allow you NOT to have to make any payments.

Want To Reduce Tax Debt By As Much As 90%?

Benefit Tax Group is here to help you. We are a group of industry professionals who understand the personal damage that can result from tax debt collection and we pride ourselves on making sure our customers have the best tax debt representation available.

If you would like a free consultation and learn more about your options, please call us now at (800) 381-8816. You can also fill out our contact form.