Tax debt disrupts and complicates the life of individuals and their families, impacting them financially, emotionally and physically. IRS actions operate a significant hardship on the average taxpayer; however, they are avoidable and remediable. While there is no lifetime guarantee to living tax debt free, Americans can rely on IRS tax help and tax debt relief measures to break free from the chains of indebtedness.
There are countless avenues for consumers to manage their tax debt. First, they can cut their spending. Secondly, they may utilize the tax laws to trim their debt. By lowering their tax bills, taxpayers will reap more savings, which in turn can be applied to the payment of debts. The tax code has carved out numerous taxpayer-friendly provisions aimed at reducing the tax burden, such as the following:
1. Tax-deductible interest
The interest that individuals pay on consumer debt is classified as either tax-deductible or non-deductible. Some of the tax-deductible categories are as follows:
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Home equity loan interest
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Mortgage interest
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Interest on student loans
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Money borrowed to purchase investment property, such as bonds, mutual funds and stocks
2. Tax breaks
Homeowners may avail themselves of tax breaks on one of three occasions: (1) when they purchase a home, (2) while owning a home, and (3) when they sell their home. For the majority of Americans, the purchase of a home enables them to take advantage of a wide range of tax breaks, and these take the form of itemized deductions.
3. Adjustment of the individual's tax withholding on his or her paychecks
4. Deductions for state income taxes, medical expenses and charitable contributions
5. Downsizing to a more affordable home
This is especially useful for new retirees, for it enables them to free up cash and eliminate their tax debt. To be eligible for the tax-free profit, applicants must be owners of the property and have lived in the home for a minimum of two of the five years preceding the sale.
A third way for individuals and businesses to obtain tax help for resolution of their payroll and income tax debt concerns involving state agencies and the IRS is to consult a tax consulting firm. Tackling state and federal tax debt issues may become complex and overwhelming for lay persons, particularly if they must file with the IRS as well as with more than one state tax agency. Tax rates, reporting requirements, and the type of tax forms required vary from state to state, further complicating matters for taxpayers relying on self-help. Tax consultants, a category encompassing enrolled agents, CPAs and tax attorneys, are indispensable to every taxpayer at some point in their lives. They analyze their client's tax case, inform them of their options and help them plot a course of action. More concretely, they specialize in minimizing their clients' tax liability by offering tax help relating to unpaid tax debt. Tax professionals offer their clients a wide array of invaluable tax services, which include the following:
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Claiming all allowable deductions and expenses on their tax returns
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Negotiating an offer in compromise or an installment agreement with the IRS
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Obtaining a release of wage garnishment
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Eliminating or reducing tax penalties (tax penalty abatement)
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Filing a petition to discharge debts in bankruptcy
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Contesting or settling an existing tax liability
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Forgiveness of tax debt
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Petitioning for tax amnesty
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Requesting a currently not collectible status
Other federal income tax debt relief options available to taxpayers are 1) requests for short-term payment extensions from the IRS and 2) loans. Consumers seeking tax help can consult a tax professional online at www.taxhelponline.com. Free, confidential consultations with a tax consultant are available in person or online. Finally, useful guides on paying off tax debt and resolving IRS tax issues can be found on the IRS website.