Finding ways to build wealth is something most people are passionate about. The more money you make in a given year, the higher your tax burden will ultimately be. When tax filing season rolls around, you will have to assess how much you owe. It is easy to let tax debt accumulate. Allowing this debt to linger can have a negative effect on your finances.
Some people think that IRS debt forgiveness is a dream. In reality, the IRS offers a debt forgiveness program. If you are unfamiliar with this program, now is the time to educate yourself. Below is some important information about the debt forgiveness offered by the IRS and how you can use it to your advantage.
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Details About the IRS Debt Forgiveness Program
Tax debt is something most people avoid talking about. American businesses and consumers currently owe over $523 billion to the IRS. Having unpaid IRS debt can be extremely stressful, which is why finding a way to pay what you owe should be a top concern. The IRS usually requires a lump upfront sump to pay the entirety of the debt owed. Being unable to pay this lump sum amount will result in fines, penalties, and other charges.
The IRS offers a few tax forgiveness programs. These programs include:
- Innocent Spouse Relief- This program provides relief for spouses that have undue tax burdens
- Currently Non-Collectible- Forgiveness for people unable to pay tax debt
- Offer in Compromise- The ability to reduce the overall tax burden
- Installment Agreements- 72-month payment plans for people who own the IRS
The only way you can be considered for these programs is if you are in good standing with the IRS. Making sure all tax returns have been filed is crucial before applying for one of these forgiveness programs.
Reasons to Consider Debt Forgiveness Programs
When trying to settle the debt you owe the IRS, you need to use all of the tools at your disposal. If you are currently dealing with multiple tax problems or you’ve accumulated lots of tax debt that you can’t pay off entirely, a debt forgiveness program might be a good option.
You need to realize that before approving you for a debt relief program, the IRS will assess your finances. If they feel like you have the financial resources to pay your debt, they will deny your request for forgiveness. This is why getting all of your proverbial ducks in a row before applying for forgiveness with the IRS.
What You Can Expect From Debt Forgiveness
The first step in taking advantage of a debt forgiveness program is consulting with a tax professional. These professionals can look at the details of your tax debt situation and recommend a viable option to pay it. The next step is filling out the debt forgiveness created by the IRS. This form will require you to provide details about your financial situation.
Once the IRS looks over these details, they will contact you with the debt forgiveness option they feel you’re qualified for. If you choose to accept this plan, you will begin paying this debt right away.
Are You Eligible For IRS Tax Debt Forgiveness?
Now that you know more about tax debt forgiveness, you are probably wondering if you qualify. In order to qualify for this program, you must have:
- A tax debt balance of $50,000 or below
- Annual income below $100,000
- A 25 percent drop in income (applies to self-employed-individuals
If you feel like debt forgiveness is the best option for your situation, contact a tax professional for assistance.