Frequently Asked Questions(FAQ)

Tax relief represents a government program or a policy initiative that has the aim of helping businesses and individuals by reducing the taxes that they have to pay. Tax relief can come in the form of a program for certain taxpaying groups or as a way to support a governmental initiative. There are multiple types of tax relief but the most important ones are:

·Tax deductions: means reducing your taxes using legal deductions;

·Tax credits: once all deductions from the taxable income of a person have been made, a tax credit will diminish the amount of remaining taxes even more;

·Tax exclusions: these exclusions apply for various types of income that are considered to be tax-free.

They say that there are two things that you cannot avoid while you live: death and taxes. Well, you should know that there are some ways in which you can diminish the amount of taxes that you owe to the IRS / state. These are some of the most frequent and useful:

·IRS contributions: by making contributions to an individual retirement account you can deduce these sums from the taxes for each year that you’re contributing. However, keep in mind that you can only deduce the full amount of your IRA contribution if you or your spouse don’t have a retirement plan from your jobs. If you do, the deductions will be limited;

·Business costs deductions: in case you own a business, you can take deductions from your business-related expenses. Make sure to do this in the current year to reduce your taxes;

·Losing money can help you: another way of paying less tax to the IRS/state is to use your capital losses to reduce the amount you owe. In the case of a stock, you should first sell the stock that’s at a loss and that will help you balance the capital gains you have. In case you have lost more capital than gained, the IRS lets you use up to $3,000 representing an excess loss to pay less tax.

Yes, tax relief companies can definitely help you in case you’re struggling with paying your taxes. By now, you have probably heard about a large number of them from various sources. Generally, these companies work in a similar fashion. You pay them for their services and they take your place in talking to the IRS. This means that the firm may try to get you a penalty relief, installment agreement, or offer in compromise.

However, even if you pay a tax relief company to represent you, there is no guarantee that it will actually succeed and the IRS will accept their terms. The worst-case scenario consists of you paying the company a fee and not getting any solution for your tax problem. This is why you should do some research beforehand and look at all the fees that you may have to pay, refund policies, and any other details that might be unfavorable for your situation.

In case you are struggling to pay your taxes to the IRS, you may also qualify for penalty relief. If you meet a certain number of criteria, you may be absolved of paying the penalties that have been put on your tax bill. However, in order to benefit from this, you should not have had any penalties for the past three years along with some other criteria. This doesn’t mean that you won’t have to pay your taxes but your bill will be significantly lower without all of those penalties.



Thankfully, unpaid taxes no longer affect your credit score and will not appear on your credit reports. However, this doesn’t mean that unpaid taxes won’t decrease your chances of obtaining loans. Certain lenders can check public records and reports where your unpaid taxes may show up. Besides that, if your tax payments take a toll on your overall financial situation and prevent you from paying other important bills, your credit score could suffer.

Tax forgiveness usually represents a bunch of credits that you can use to diminish your taxes.  However, there are some things to take into consideration to see whether or not you are eligible for such credits. Things like taxable and non-taxable income, financial situation, and family size will be taken into account by the IRS. The main idea is that you should prove that your expenses will decrease your income to a very low level which will get you into financial hardship. The IRS will analyze your case and decide on an outcome depending on multiple factors.

The Fresh Start Initiative was created by the IRS back in 2011 to help struggling taxpayers. The program includes three main features that are extremely important:

·Tax liens: the program increased the amount of taxes that individuals or businesses can owe before they receive a Notice of Federal Tax Lien from the IRS. It now stands at $10,000;

·Installment agreements: the access to them has been increased and now individuals who have to pay up to $50,000 in taxes can use direct debit payments for a maximum of six years;

·Offer in Compromise: this lets individuals or businesses compromise their tax for less than its full amount. Thanks to the Fresh Start Initiative, the OIC has been streamlined, offering the IRS a lot more flexibility.

Most people need to pay back taxes to the IRS / state because they did not adhere to the pay-as-you-go method when it comes to tax payments. If you fail to pay your taxes, not only you will be obliged to do it but penalties will be added, increasing the sum you owe. There are two ways in which this can occur:

·Your employee should pay your taxes periodically by withholding the necessary amount from your gross income;

·You, as an individual or business, should periodically send estimated tax payments to the IRS. You can also file an extension that will extend your tax return filing period (in case you don’t have all the necessary information before the deadline) but not your actual tax payments.

All taxpayers can verify their payment history and current balance by accessing their online account on the official IRS website. In order to see these details, you will have to confirm your identity. Usually, recent payments will appear in your account within three weeks in case of physical payments.

Paying your taxes on time is the best thing that you can do if you want to avoid any more problems with the IRS, like penalties if you fail to file your tax return on time or if you don’t pay what you owe. There are some advantages that you will enjoy if you try to pay your taxes as soon as possible, like:

·You won’t have to offset any future refunds;

·You won’t have problems obtaining loans;

·You won’t have to pay even more by gathering penalties and interest on your tax bill.