What is Tax Relief?

Tax relief is usually a policy initiative or a program established by the government through which both individuals and businesses can be helped in case they struggle with paying their taxes. A tax relief program can diminish their taxes and therefore help them overcome this type of issue. A tax relief program can also have the aim to support an initiative from the government or can only target a certain group of taxpayers.

Local taxes and state taxes can also be reduced through tax relief. Besides that, a tax relief program can also help you come up with a more advantageous payment plan. In this article, we will find out more about tax relief as a whole, about how it works, and what you should know before deciding if it’s the right choice for you.

How Does Tax Relief Work?

As we already said, a tax relief program can either help you create a payment plan for your taxes that you can manage more easily or can reduce the amount of taxes you owe. Either way, the final goal is for the individual or business to have an easier time when it comes to paying all types of taxes to the IRS.

It’s worth noting that different people or businesses choose different approaches when it comes to paying taxes or choosing tax relief. For example, most people only choose a tax relief program once they’ve realized that they simply cannot pay their taxes. Others do this right as they are filing their taxes because they think ahead and don’t want any financial problems moving forward.

Another important factor to consider regarding tax relief is that there are some back taxes relief initiatives from the IRS that are especially created to help you pay your taxes once the due payment date has passed. Others, those usually being exclusions or deductions, can diminish your back taxes before the due payment date. So, as you can see, there are many options to pick from if you don’t want any more issues with the IRS and paying your taxes.

In order to be eligible for tax relief, you should first establish what type of program fits your needs best. Each of them has its own requirements and it’s important to know where you stand before entering one or the other. We will explain each of them in detail but in general, you should know that the IRS will search through all of your financial documentation before accepting you. Your income, investments, assets, history, and revenue sources will be thoroughly analyzed.

Additional Features to Consider

In order to see which tax relief program fits your needs best, you should first do some research and gather as much information as possible about each of them. You should know that there are more than one tax relief programs out there which you can take into account when making a decision. Here are the most important features of each of them.

IRS Repayment Plans

This is one of the most common types of tax relief solutions offered by the IRS thanks to which you can break down your balance into a set of smaller and more affordable payments. The long-term IRS repayment plan lasts at least 120 days and requires you to owe $50,000 at most. The short-term plan lasts a maximum of 120 days and in order to qualify, you have to owe no more than $100,000.

Even if these IRS repayment plans are certainly helpful and can offer you that helping hand when in need, they come with some downsides too. For example, in most cases, you will have to pay an upfront setup fee to which you should add interest and penalties.

Tax relief companies can help you if you don’t feel like you can handle the situation alone. You will only have to give them all the required documents and their experts will do the job for you. However, these companies won’t work for free either.

Offer in Compromise

If you pick this tax relief option from the IRS, then you will be allowed to your back taxes for less than what you owe. This is a good choice in case you cannot pay your full back taxes or if doing so could cause you to struggle with severe financial difficulties.

However, the eligibility requirements for this type of tax relief are very strict, and not many people are eligible. When applying, the IRS will analyze your expenses, income, assets, and your payment ability. Usually, those people who the IRS considers would go through financial hardship as a result of paying their taxes are accepted.

Interest Abatement or Penalty Relief

This type of tax relief solution doesn’t erase your due tax amount but only diminishes it by forgiving the penalties you owe. However, in order for the IRS to do that, you need to not have penalties for the past three years along with some other requirements. Interest abatement is also a solution but it happens very rarely.

The Fresh Start Initiative

The IRS Fresh Start Initiative represents a streamlined solution through which taxpayers can benefit from installment agreements, an offer in compromise, or a tax lien withdrawal. It’s been active since 2011 and has the purpose to make it easier for people to access one of those three tax relief options.

How We Can Help You Decide

In case you are on the lookout for a tax relief service and are unsure where to start, we can help you by providing extensive reviews on the most important tax relief companies in the country. Also, our website contains a set of frequently asked questions and tax relief articles meant to help you understand this process better. Last but not least, by visiting our platform you will have the opportunity to compare various tax relief firms and see which ones fit your needs the best.

Bottom Line

All in all, as you can see, there are multiple tax relief solutions that taxpayers and businesses can access in case of financial trouble. All of them have requirements but some are stricter than others. The key is to get all the necessary information before deciding on a program and balance out your options very carefully. Our website can help you do precisely that and therefore make your job a lot easier than it would have been if you were to do it on your own.