What Is Tax Relief?
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.
How Can I Pay Fewer Taxes To IRS / State?
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.
What Is Tax Forgiveness?
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.
What Is The Fresh Start Initiative Program?
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.
If you want to know if you quality for OIC ask yourself these questions.
1.) Do I legitimately owe the money?
2.) Do I have the means to pay the money owed?