No one ever tells you how expensive life can be, and you may not find out the depth of your lifestyle expenses until debts rack up. Studies have shown that more than 50% of Americans spend more than they earn each month and bridge the gap by using credit. This creates an even bigger gap in individual debts and solely works to increase debt totals. And since it’s easier to ignore the reality of owing money, many look beyond solutions and dig themselves even deeper.
Tax debt is a bit of a different story. Owing to current or back taxes to the government can weigh heavier on your mind and wallet if you’re unable to find a quick and manageable solution. And, unlike college student loan debts, the government can enforce serious liens and levy penalties if your debts go unpaid. In the event that you are having difficulty paying your taxes on time, seeking tax relief may be your best bet.
What is tax relief?
Tax relief is a program or incentive that aims to reduce your tax liability—effectively making your financial life easier when tackling repayment. Typically this type of relief comes in the structured form of a payment plan or debt settlement with the IRS.
The Fresh Start Initiative is a program introduced by the IRS give taxpayers viable avenues for paying off their tax debts over the course of six years. Functioning as a monthly installment plan, the Fresh Start Initiative simplifies the head and heartache met with handling outstanding tax debts. It also helps taxpayers avoid IRS consequences such as:
- Wage levies
- Asset seizure
- Tax Liens
How does the IRS Fresh Start program work?
Officially launched in 2011, the IRS Fresh Start Initiative has been updated and modified to adapt to the needs of the common taxpayer. Today, there are three key elements to the program that assist indebted taxpayers with their outstanding bill.
- The procedures behind the application and execution of Offers in Compromise have become more streamlined for added flexibility. This option acts as an agreement between the taxpayer and the IRS that settles a tax liability for less than the actual due amount.
- The Fresh Start Initiative increased the amount that taxpayers are allowed to owe before the IRS files a Notice of a Federal Tax Lien to $10,000. This gives a bit more breathing room for taxpayers with lower tax bills.
- Under the FSI, installment agreements have been modified to allow up to 6 years for repaying taxpayers to square away their outstanding tax bill.
How do you qualify for the IRS Fresh Start Initiative?
In order to qualify for the IRS Fresh Start Initiative, you must owe less than $50,000 in taxes. Additionally, all missing or unfiled tax returns must be filed.
How can tax relief help with debt?
Ending up with a tax bill is not an easy reality to face, especially when you may have been expecting a nice return. For example, a full-time freelancer may end up with a hefty tax bill under Trump’s Tax Cuts and Jobs Act. If you’re unable to pay your taxes in full, the first step is to contact the IRS for immediate assistance. Looking to the Fresh Start Initiative is an excellent place to source tax relief help for your debts.
Though seeking tax relief doesn’t necessarily lower the amount of taxes you owe, it can definitely transform your lump sum debts into manageable payments. Seeking help in a situation where money feels too tight or your livelihood is always the better option than going at it alone.
If you think you may need tax relief to assist with your tax repayment, it’s always better to take action as soon as possible rather than wait for the IRS to reach out again. And trust us, they won’t just forget about your outstanding tax bill.
The IRS has a reputation of being intimidating for a reason. They take your taxpaying civic duties more seriously than anyone else, so the moment they notice that you’ve fallen behind or have become unresponsive to their notices, they’ll be knocking at your door. Stay one step ahead of the IRS by dealing with your tax responsibilities ASAP. Using tax relief as a resource is the best place to start.