Chillious
Best choice for Financial and Cryptocurrency News

- Advertisement -

- Advertisement -

BTC
$13,850.12
+1.66%
ETH
$389.67
+1.43%
LTC
$55.95
+2.01%
DASH
$70.50
+0.61%
XMR
$126.69
+2.95%
NXT
$0.01
-2.82%
ETC
$5.30
+0.72%
DOGE
$0.00
-5%
ZEC
$58.59
+0.24%
BTS
$0.02
-1.83%
DGB
$0.02
-1.37%
XRP
$0.24
+0.42%
BTCD
$34.79
0%
PPC
$0.21
+0.27%
CRAIG
$0.00
0%
XBS
$0.03
0%
XPY
$0.07
0%
PRC
$0.01
0%
YBC
$1,308.10
0%
DANK
$0.00
0%

Types of Tax Resolution: Tax Settlements Explained

When you have tax problems, it’s easy to get confused about what your options are. Here’s a quick run-down of the most common tax settlements, so you can have a better idea of where to start when you’re looking to file for tax resolution. While the forms and definitions can be rather dense and impenetrable, the basics of each option are pretty straightforward.

Innocent Spouse Relief: Filing joint tax returns is an easy way to reduce paperwork and make filing tax returns a bit less of a hassle. But it also means that both spouses are equally responsible for paying the taxes owed. If there is an underpayment of tax, due to an intentional omission or an error, both parties can be held liable. However, the IRS understands that the back taxes aren’t necessarily the fault of both, and innocent spouse relief is the channel you can use to relieve your responsibility for tax problems created by your spouse, or ex-spouse. There are three types of innocent spouse relief, and filing for this type of tax help can alleviate all or part of your responsibility for the tax issue.

Offer in Compromise: An offer in compromise is a powerful tool used to actually reduce the amount of money you owe to the IRS. The tax authorities understand that in some situations, it’s not realistic to expect that a taxpayer can repay their entire back taxes within a reasonable period of time (due to the size of the debt in relation to the taxpayer’s assets and income). In these cases, the IRS realizes it’s in their best interest to collect some of the debt rather than nothing at all–enter the offer in compromise. The taxpayer proposes an alternate amount, often far less than the delinquent tax and combined penalties/interest, to settle their whole tax problem, and if accepted by the IRS, this tax debt reduction agreement can make a dramatic difference in your ability to finally pay off the tax debt.

Remember, offers in compromise are an appealing option to any taxpayer with delinquent taxes, but these tax debt reductions are extremely hard to qualify for. Approximately 75% of all offers in compromise are rejected every year, so it’s important to not get fixated on the allure of IRS debt forgiveness, especially if you don’t even meet the standards to apply for this type of tax resolution. It is highly recommended that you work with a qualified tax consultant to apply for an offer in compromise as this will give you the best chance of securing this tax relief option.

Penalty Abatement: From failure to file to failure to pay and beyond, the IRS can assign you numerous penalties that really add up. In fact, penalties can often add up to nearly 50% of the initial amount owed! However, for individuals with a legitimate reason for failing to file or pay, penalty abatement is an option. This will remove the penalties from your tax debt, helping reduce the overall total outstanding so you can pay off your tax debt sooner. The IRS only awards penalty abatement under specific conditions, such as destruction of tax records by a natural disaster or unavoidable absence due to incarceration, so be sure to determine if your situation qualifies before you apply. To secure IRS penalty abatement, you’ll also need to provide adequate documentation to support your claims.

Installment Agreements: In many cases, the overall amount of the back tax debt isn’t impossible for you to handle. However, paying off the outstanding total all at once is out of the question. In these cases, you can set up a structured payment plan with the tax authorities wherein you pay a set amount each month to pay off the whole debt in a predetermined period of time. This helps make your tax problems more manageable and allows you to eliminate the tax issue over time. Remember, with most IRS installment payment plans, your debt will still continue to accrue interest, but you won’t be continuing to rack up penalties on top of what you already owe.

If you’re still feeling confused and overwhelmed, don’t give up. Your local tax consultant or tax attorney firm should have representatives available to help you through the process of obtaining a tax settlement. You don’t have to go it alone, so don’t just put off dealing with your tax issues because you’re bewildered by all of the different options on the table. Ending your tax problems sooner rather than later is always the right solution, so bring in professional help to get started on your tax resolution today!

Comments are closed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. AcceptRead More