Who Is Eligible for Tax Forgiveness?

who is eligible for tax forgiveness

Four in ten Americans are struggling financially, and if you find yourself in the same situation, you might find it hard to meet your tax obligations. Maybe you feel as if you’re drowning in debt, and you already owe back taxes. 

Is there a debt forgiveness program you can turn to? Perhaps you’re wondering who is eligible for tax forgiveness and if you qualify. 

There is help out there, and we want to guide you through your options. Learn about tax forgiveness, what you can do to improve your situation, and the benefits of seeing a tax law expert for help. 

What Can the IRS Do? 

Most people pay their taxes voluntarily; however, this isn’t always possible. For those that don’t file and pay what they owe for taxes, the IRS tacks on additional penalties and interest, which only adds to the amount you need to pay back. 

For people that are struggling to get by or living paycheck to paycheck, paying back taxes and escaping debt can seem like an insurmountable task. 

The IRS can and will take various actions to collect taxes. They can file a Notice of Federal Tax Lien, offset a refund, or serve a Notice of Levy. 

One action the IRS can take is to seize your assets and sell your property, such as your car or buildings you own.

They can also levy or seize your wages. If this happens, part of your paycheck will go to the IRS each pay period until the debt is paid off or the levy released. Part of your wages can be exempt, but this still puts people in a tight spot. 

The IRS could also levy your Social Security benefits, retirement income, or bank accounts. 

The IRS can file a Federal Tax Lien, which is a claim against your property. Doing so negatively impacts your credit score. 

You don’t want it to come down to any of this, so what can you do? Thankfully, if you can’t pay your taxes, you have the option of qualifying for tax forgiveness. 

What Is Tax Forgiveness? 

IRS tax debt forgiveness or relief allows those with back taxes or unpaid taxes to lower their debt amount. You can settle your debts for less than you owe, pay what you owe in installments, or push back the deadline if it might cause financial hardship. 

There are a few different IRS tax forgiveness programs, which we’ll cover shortly. The first step is to determine how much you owe, and that includes the interest and the penalties you’ve accrued. 

You can contact the IRS online or call them, though this may not be the fastest method depending on if you need to speak with someone directly. It’s also nerve-wracking to deal with the IRS, especially if you have unpaid taxes. 

Speaking with a professional that understands back taxes and can speak to the IRS on your behalf is the best solution. Not only will you learn what you owe, but the best options for a resolution. We’ll contact the IRS and get a Protection Order and negotiate on your behalf. 

Who Is Eligible for Tax Forgiveness?

You might be eligible for tax debt forgiveness if you meet the following qualifications: 

  • You have a debt of $50,000 or less.
  • You’re single, and your income is less than $100,000.
  • You’re married, filing jointly, and your income is below $200,000.
  • You’re self-employed and have a 25% loss of income or more.

Eligibility for a tax forgiveness program depends on your circumstances, and each option has different requirements. Whether you qualify or not depends on your case, so it’s best to have a tax expert on your side to answer any questions and work with the IRS for you. 

Tax Forgiveness Programs and Options

If you have unpaid taxes, you have more than one option. We’ll go over some of the most common relief programs so that you can find the best solution for your case. 

Offer in Compromise

An Offer in Compromise (OIC) is best for those that are struggling financially. With this tax forgiveness program, you pay back less than what you owe. 

The IRS will consider the following: 

  • Your ability to pay
  • Income
  • Asset equity
  • Expenses

Taxpayers will offer to pay back a certain amount, and the IRS will either accept or reject the offer. It’s extremely common for the IRS to reject an offer, but having a professional team on your side to negotiate can help improve your chances. 

You may qualify if you: 

  • Filed your tax returns and made estimated payments.
  • Are an employer and made tax deposits for the current and past two quarters.
  • Have an extension for the current tax return year.
  • Are not in an open bankruptcy proceeding.

Installment Agreements

If you can’t pay the full amount of what you owe now, you can pay in installments. It’s a decent option if you have some disposable income to put toward the installments, though you’ll have to remain consistent with your payments. 

The tax amount owed on an installment agreement expires after seven years. 

You have several types of payment plans to consider: 

  • Guaranteed
  • Streamlined 
  • Direct Debit 
  • Partial
  • Financially Verified

Keep in mind you will owe interest on your debts. 

Financial Hardship and Currently Not Collectible

If you don’t have any assets, and you honestly don’t have the money to give the IRS, or if paying taxes would put you in a difficult position, you can claim financial hardship and apply for non-collectible status. 

Doing so often requires disclosing your finances and expenses, such as rent, bills, food, and so on. 

The IRS won’t forgive the debt, but it does stop them from collecting taxes for a time. 

Exploring Your Options and Finding Tax Debt Relief

You have options if you’re struggling to pay the IRS. However, the longer you wait to resolve your debt, the more likely you are to find yourself in trouble. 

If you have more questions about who is eligible for tax forgiveness, Fiscal Solutions can help. We promise to look at your case and find the best solution for your tax debt so you can take your life back. Take a look at our services to see how we can assist you and work with the IRS on your behalf.

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