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Tax forgiveness from the IRS is something that a lot of people and businesses resort to every year because they have trouble paying their taxes. There are a lot of reasons why this happens to so many people, from wrong income estimations to failing to complete the necessary tax forms. This is how a large number of people end up having to pay back taxes along with penalties and interest. When this happens, things can become overwhelming.

This is why, in this article, we will be talking about what tax forgiveness actually is and how it works, among other important details that everyone needs to know. Before anything else, it’s important to be informed about this subject and when the time comes, to make an educated choice between the various tax forgiveness possibilities that exist. Here we go!

How Does Tax Forgiveness Work?

Tax forgiveness comes in the form of solutions or credits that the IRS offers to those who are unable to pay their taxes. These programs are mostly aimed at people who would fall into financial hardship as a result of paying everything they owe and come in different types. From splitting your total owed amount into smaller payments to reducing the total balance as a result of erased penalties, there are some solutions to your tax-paying issues.

However, not everybody qualifies for tax forgiveness because the IRS thoroughly analyzes a bunch of details when it comes to applicants. Things like your income, both taxable and non-taxable, family size, or overall financial history matter a lot when the IRS decides to accept your application or not.

There are also tax forgiveness solutions for exceptional cases like innocent spouse provision or natural disaster assistance. Here are more details about them:

·         Innocent Spouse Provision: this tax forgiveness solution applies to legally-separated or divorced couples. In case one of them has a tax liability that the other can prove wasn’t common, the innocent spouse can be saved from paying that liability. However, things are not as simple as they sound because the innocent spouse must have substantial proof that they weren’t in any way involved in what the other spouse was doing, tax-wise;

·         Natural Disaster Assistance: in this case, the IRS lets people who have been victims of declared natural disasters itemize their deductions and therefore claim casualty losses. This applies to both businesses and properties that have been affected by the said natural disaster. Plus, taxpayers can do this during the same year that the disaster occurred and therefore be absolved from paying their full taxes. The IRS also offers term extensions for tax filing to the people in the affected regions.

Currently Non-Collectible

This is another special type of tax forgiveness that the IRS can offer but it’s not that common because it can completely save you from paying your taxes. In order to be eligible for this type of tax forgiveness, you need to provide all the necessary documentation that will prove that paying your taxes will get you and your family in severe financial hardship. Basically, you need to prove that you might not be able to have a house or the money to live a normal life after paying your owed amount. Some taxpayers are eligible for this while others are not. Besides that, it’s important to note that the currently non-collectible status is only a temporary one that the IRS can revisit anytime they want.

Additional Features to Consider

We also need to talk about the Offer in Compromise option which can be seen as the next best thing after complete tax forgiveness. The IRS lets you decide on the amount that you wish to pay which is, obviously, less than the amount you actually owe. Not everyone is eligible for this and before deciding to accept an applicant, the IRS will check their income, ability to pay, asset equity, and expenses.

A taxpayer is not eligible for an Offer in Compromise if they are currently involved in bankruptcy. Also, a person is not eligible if they have not filed all the necessary tax returns or made any estimated payments before applying for an Offer in Compromise.

As previously mentioned, there are many reasons why people fail to pay their taxes to the IRS. Most of them either understate or overstate their income. The IRS doesn’t spare anyone who has paid taxes on less money than they have actually made unless they apply for a tax forgiveness service.

Tax forgiveness can also be offered in certain special situations that have to do with someone’s income. For example, in the state of Pennsylvania, if you make less than $6,500 in a year, you may be absolved from paying any taxes to the IRS. The overall process is not that simple but it exists and some people are eligible for it.

How We Can Help You Decide

When it comes to how we can help you decide on a tax forgiveness option, we can provide you with a set of professionally-written reviews on most major tax relief companies in the country. Moreover, thanks to our website, you can compare those firms and establish which one fits your needs best. Last but not least, the frequently asked questions page on the website should provide you with all the important details concerning tax relief and not only.

Bottom Line

To sum it all up, tax forgiveness exists only to help those taxpayers who are in dire need of help and who cannot pay what they owe. There are tax forgiveness options that only reduce the amount owed or create opportunities for easier payment while others can save you from paying all of your taxes. Obviously, some eligibility requirements are rather harsh but mandatory if you want help with your taxes.

Keep in mind that you can also enlist a tax relief company to help you with these procedures. However, it’s important to only work with professional and secure firms that know exactly what to do and can reach a favorable conclusion. They don’t work for free, however, so be prepared to balance your options wisely.