If your tax bills are piling up and you can’t seem to get a hold of your payments, you may want to seek tax relief. Almost everyone uses government tax assistance in one way or another. Discover your tax relief options today to lower your bills and strengthen your financial standing.

What Is Tax Relief?

In simple terms, tax relief helps to reduce the amount of money you owe for your taxes. There are government-sponsored tax relief programs to help individuals and organizations get breaks on their tax bills and reduce financial burdens.

There are many different forms of relief. There may be universal tax cuts, programs that offer benefits to certain groups, or that assist the government in reaching specific goals. It is important to know what your options are and what you are eligible for.

Direct Relief Programs

Direct relief programs are for taxpayers who are in special circumstances, such as individuals who are victims of a natural disaster. Programs and the amount that the government will forgive differ in each situation.

For example, during Coronavirus, there were direct tax relief programs aimed at assisting individuals who were negatively impacted by the pandemic. Some of these programs, like the Child Tax Credit and Recovery Rebate Credit, are still in place today. To discover if you are eligible for these programs and to learn more, visit the IRS website.

Tax Deductions

This is probably the most popular form of tax relief. Tax deductions reduce your taxable income during the year, which then decreases your overall tax bill. The amount of deductions you are eligible for depends on your filing status, age, if you have a disability, or if you have dependents.

If you do not want to pick a deduction that is offered directly by the IRS, you can create your own itemized deductions list. To do this, you will have to fill out a Schedule A Form 1040 or 1040-SR Form, but you can not file for both.

Items that can be individually deducted from your gross income include mortgage interest, charitable donations, medical and dental expenses, and some state and local taxes.

Tax Credits

Unlike deductions, tax credits directly reduce the amount of tax that you owe. Credits are often described as tax incentives because they reimburse taxpayers for doing things that the government wants them to do. Some popular tax credits include earned income tax credit, child tax credit, and saver’s tax credit.

To learn more about specific tax credits and discover if you are eligible, visit the IRS website.

Tax Exclusions

Tax exclusions will set aside certain types of income as non-taxable, which in turn will reduce your overall tax bill. Usually, there are exclusions for things like child support payments, life insurance death benefits, municipal bond income, and employer sponsored health insurance.

Similarly to exclusions, tax exemptions will keep some income from being taxed for certain individuals or organizations. In many cases, churches or nonprofit organizations may be eligible for tax exclusions.

IRS Fresh Start Program

Another form of government tax debt relief that is directly sponsored by the IRS is the Fresh State Program. This helps taxpayers catch up on back taxes and avoid the consequences of not paying their bills. There are a few different options available to those who qualify for Fresh Start.

Offer In Compromise (OIC)

If you qualify for OIC, you will be able to settle your tax debt in an amount that is less than what is owed. This is specifically for people who want to get their debt off their backs but can not possibly pay back the full amount due to current financial hardships.

Currently Not Collectible (CNC)

If the IRS determines that your monthly income is too low to pay what you owe to them without putting yourself and your family at risk, then you may qualify for CNC. If successful, the IRS will stop attempting to gain collections until you are financially stable.

Installment Agreements

If you opt-in for an installment plan with the IRS, you will pay what you owe over an extended period of time with a monthly payment plan. Interest and penalties may be applicable in these situations.

Penalty Abatement

If you have incurred penalties on your account, the IRS can remove these, but only if you have reasonable and legitimate reasons for them to do so. These reasons may include fires, natural disasters, death, or serious illnesses.

Conclusion

If you feel like you need help with your taxes, there are many resources available. The government is there to help you in times of financial hardship. By understanding the options available, you can get a hold of your taxes and rebuild your finances.