Tax relief explained
There can be any number of reasons why you’re not able to pay your taxes. Regardless of the reason, you do have options if you find yourself in this situation. You’ll be happy to know that there are a few things you can do to help out your financial situation with Uncle Sam. It’s called tax relief. Please be aware that tax relief does not refer to your debt being erased. Read on to see what tax relief really is and what some of your options could be.
Well, what is it?
All tax relief refers to is the IRS’s attempts to work with you to collect the debt you owe them. This can take the form of repayment plans or negotiated lowering of debt owed.
Repayment Plans
There are two repayment plans through the IRS. One is a short-term payment plan and the other is a long-term payment plan. The short-term is repaid within 120 days, while the long-term is paid in 120+ days. According to Nerd Wallet, to qualify for the short-term you need at most “$100,000 in combined tax, penalties and interest.” The qualifier for the long-term is “$50,000 in combined tax, penalties and interest.” The short-term has no filing fee whereas the long-term has a filing fee that varies depending on your payment method.
Offers in Compromise
An offer in compromise refers to the IRS lowering the overall money owed. Simply put, if there is no way for you to pay your taxes, you might qualify for an offer in compromise. To make this process easier, the IRS has a free-to-use webpage you can find by googling “Offer in Compromise Pre-Qualifier.” Fill out the information and you’ll see if this option is possible for you.
Currently Not Collectible
Assuming you can’t pay your taxes and expenses, you can request your debt be put on “Currently Not Collectible” status. This means you don’t have to pay your taxes yet. Pay attention to the yet. Should your financial situation change, the IRS can ask you to pay your debt. This doesn’t make your taxes go away. The point being that they are on hold until you can pay them off.
In Conclusion
Having taxes you can’t pay is not the end of the world. You have options. Be informed.
