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Tax relief

How To Pay Back The IRS With Payment Plans and Installment Agreements

How To Pay Back The IRS With Payment Plans and Installment Agreements

By on Nov 27, 2018 in Tax relief | 0 comments

If you’re not able to pay the taxes you owe by the due date, the balance is subject to interest and a monthly late payment penalty. By law, the IRS may assess penalties to taxpayers for failing to pay taxes they owe by the deadline.   People tend to forget that there’s also penalty for failure to file a tax return, so you should file in a timely manner even if you can’t pay your balance in full.   If you can’t afford to pay your taxes and you’re not sure what your next move should be, fear not, there is a way out of that tight situation. You may be able to qualify for an installment plan with the IRS. An installment plan allows you to pay your taxes over time while avoiding garnishments, levies or other collection actions. The minimum monthly payment for your plan depends on how much you owe.   Minimum monthly payment   The most logical and beneficial option available for struggling taxpayers are installent plans. You can apply for an installment agreement online, over the phone, or via IRS forms. To some degree, you get to choose how much you want to pay every month and how much is yours worth? The IRS will work with you to find out what you can afford to pay per month, encouraging you to pay as much as possible to reduce your interest and penalties.   If you select too low of an amount, or let the IRS pick a payment amount for you, your minimum payment will be the amount that you owe divided by 72.   If you can pay off your balance within 120 days, it won’t cost you anything to set up an installment plan. Otherwise, you’ll owe about $52 for setting up a direct debit agreement with the IRS, or $105 for a standard or payroll deduction agreement. If you’re a lower-income taxpayer, you may be able to reduce that fee to $43.   Payment Plans   If you owe less than $10,000 to the IRS, your installment plan will generally be automatically approved. Under this type of plan, as long as you pledge to pay off your balance within three...

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Separation of Liability Relief: Who Qualifies?

Separation of Liability Relief: Who Qualifies?

By on Nov 8, 2018 in Tax relief | 0 comments

If you’re dealing with a difficult time in your life, then any added tax burden can just make things worse. Relief by Separation of Liability is a technique offered by the IRS to allocate tax understatement, interest and penalties from a joint return between you and your spouse or former spouse. While you can’t use it to divvy up a refund, this kind of relief can be an excellent way to sort out unpaid liabilities.   There’s no such thing a free lunch when dealing with taxes, however. Only certain taxpayers qualify for relief under this rule.   Separation Relief Requirements   To request separation of liability relief from the IRS, you need to have filed a joint return in the past. If you didn’t file jointly, then chances are that you don’t have too much in the way of this kind of liability anyway. Otherwise, you have to fulfill one of two requirements at the time you send in your IRS Form 8857.   Scenarios that meet those requirements include:   You have not been a member of the same household as your spouse during the last 12 month period ending on the day you sent in Form 8857. You are either legally separated from your spouse or are no longer married to them.   While it’s easy to know the exact date you legally separated from your spouse, taxpayers trying to claim they weren’t a member of the same household are dealing with a slightly more complicated situation.   Proving You’re Not Members of the Same Household   Estranged spouses who aren’t legally separated aren’t part of the same household if they live in physically different locations. However, the IRS has some very specific rules about what constitutes living in a different location. If you were in the same dwelling during the last year, then you’re considered members of the same household. Keep in mind that the IRS might consider a shared apartment to be the same dwelling. The same might even go for a trailer in some cases.   Even if you didn’t live in the same dwelling, you have to prove beyond reasonable doubt that neither of you planned to move back in together. IRS...

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How an Underpayment Tax Penalty Can Be Waivered

How an Underpayment Tax Penalty Can Be Waivered

By on Sep 27, 2018 in Tax relief | 0 comments

If you pay estimated taxes and your estimates come up short, then you could get hit with a stiff financial penalty from the Internal Revenue Service (IRS). Taxpayers who collect income that’s not subject to withholding are supposed to pay estimated taxes. This kind of income includes everything from investment dividends and interest to alimony and lottery winnings. Even paychecks earned by self-employed entrepreneurs are potentially taxed under these rules because nothing gets taken out of them.   The good news is that any penalty you owe on an underpaid bill can be waived.   Calculating Underpayment Penalties   You need to submit IRS Form 2210 to see if you owe any underpayment penalties, which involves calculating your total liability. The IRS calculates penalties based on each individual payment period, and the form comes with two calculation methods to help you find out how much you potentially owe. Use the most recent version of this form because underpayment penalties change annually.   Legitimate Reasons to Request a Waiver   Properly establishing reasonable cause for the underpayment is key to getting it waived. The IRS will require you to meet certain criteria before they’ll wipe away any penalties you might owe. All taxpayers who want to claim a waiver have to prove that they didn’t neglect to make estimated payments on purpose. One or more of the following also has to be true:   A natural disaster, casualty, fire or other serious disturbance prevented you from making the payment on time You couldn’t receive records or other types of financial information needed to file; You became seriously ill or disabled before you had a chance to pay your estimated taxes After the age of 62 you decided to retire   Keep in mind that the IRS doesn’t consider insufficient funds to be a legitimate reason for failure to pay or file on time. However, the reason you didn’t have money at the time the estimated payments were due could meet the above criteria.     Requesting a Waiver from the IRS   Applying for a waiver can be as easy as including a written statement with Form 2210 that explains why you weren’t able to make the whole payment on time. You’ll also need to include the...

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IRS Repayment Options Explained

IRS Repayment Options Explained

By on Sep 13, 2018 in Tax relief | 0 comments

Taking no action is the worst thing you can do if you owe any federal tax debt, especially considering that there are options. If you’re not able to pay your taxes by the original filing due date, then the balance is immediately subject to interest and late penalties. You may also be responsible for penalties associated with never having filed a return. Every day that ticks by allows that debt to grow larger. We will describe below some of the options available to help you repay all the money you to the IRS. You can ease your burden by taking action early on. Consider the following options you have to repay whatever you owe the federal government. Paying IRS Debts Outright Taxpayers who have the money to pay their debt immediately can do so with an electronic funds transfer or with a debit card. Once you’ve paid off the debt, no further interest or penalties can be assessed to you. The IRS will even accept payment from any major credit cards you might have.   Full Payment Agreements Short-term tax debts are the easiest to fix. Say you don’t have the money to pay your taxes in full by the time the due date rolls around, but you’ll have the money within several months. This often happens because you need to deal with an emergency right as tax time rolls around. If you find yourself in this situation, then you can apply for a full payment agreement from the IRS. While interest and penalties will accrue until you’ve paid off your total liability, there’s no other fee associated with the application. Taxpayers who qualify for this option can get up to 120 days to repay their debt.   Monthly Installment Agreements Apply for an installment agreement if you can’t pay off the debt in the near future. Since this involves a formal application process, it does require you to pay a fee. However, it’s much easier to pay your tax debt off if you’re approved because you’re given the freedom to make fixed monthly payments to the IRS without interest. This turns your tax debt into a predictable, monthly expense that you can budget for.   Currently Not Collectible...

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How to Calculate Underpayment Penalty

How to Calculate Underpayment Penalty

By on Sep 6, 2018 in blog, Tax relief | 0 comments

If you underpaid your federal taxes in the past, then you might be looking at a penalty from the IRS. Taxes are generally withheld by your employer, but self-employed entrepreneurs don’t get income taken out of their payment. You may have accidentally underestimated how much money you were going to make over the next quarter and, therefore owe the IRS additional taxes plus a fee. Fortunately, calculating the underpayment penalty you owe shouldn’t be that difficult. You simply need to get your hands on the right IRS form to do it. Using IRS Form 2210 to Calculate An Underpayment Penalty IRS Form 2210 is known as the Underpayment of Estimated Tax by Individuals, Estates and Trusts form. You can easily acquire it from the federal agency and features a flowchart designed to help you calculate the penalty. Part I of underpayment form 2210 will ask you to enter your total tax responsibility after credits from your normal 1040. You’ll also need to add any other relevant taxes such as the self-employment tax as well as any refundable sums, like the premium tax credit. It should then ask you to add these values together and multiply them by 90 percent. You’ll then need to subtract your withholding taxes from this new number and figure out the required annual payment. It might sound like a job and a half to get through, but doing it correctly can save you plenty of money. The bottom of this form provides a small chart that should help you figure out the total penalty you owe based on the number you’ve come up with. It gets multiplied by a small fraction, so don’t get caught up on how large the value looks right now. This isn’t the amount you need to pay in the end. Zap Away Your Underpayment Penalty You may be able to eliminate the underpayment penalty altogether. If you owe less than $1,000 after subtracting any relevant credits or previously withheld money, then you’re not responsible for the underpayment penalty. You also won’t owe the IRS any additional money if you’ve already paid at least 90 percent of the taxes due for the year. Those who have paid all of their taxes...

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Do You Have to Pay Your Dead Relative’s Back Taxes?

Do You Have to Pay Your Dead Relative’s Back Taxes?

By on Aug 21, 2018 in Tax relief | 0 comments

Taxes, change, and death are three certainties we have in life. The death of a relative can have a significant impact on an individual in terms of taking care of his or her estate. We are all are aware of this kind of scenario—of all the psychological consequences death represents. Back taxes, as it should be known, are partially or fully unpaid taxes from the year that they were due.   As the Internal Revenue Service (IRS) clearly states, the income tax return of a decedent is prepared in the same way as if the person were still alive. All income must be reported and all the deductions to which the deceased is entitled may be claimed. This also means that all debt must be paid. Debts can be paid by getting loans from Loanlingo co uk   Are We Responsible for our Relative’s Unpaid Debt?   To answer it simply: no. If a person dies leaving unpaid taxes, the relatives are not responsible for the debt. The only individual held responsible for a decedent’s debt is the estate executor under specific circumstances. The estate executor becomes responsible if he or she distributes the assets according to what is stated in the will before the taxes have been paid, or if he or she is aware of the existences of debt and stills transfers or sells the property of the deceased, ignoring the fact that a payment must be made.   More about Estate Taxes   Estate taxes are taxes that are imposed on the net value of a decedent’s property before it is distributed to the rightful heirs. If a person dies owing money to the IRS, his or her assets will be put under a legal claim known as a tax lien. This means that said assets cannot be neither sold nor transferred to another person until everything has been paid off. If the debt cannot be financed in its entirety, then the IRS has the right to seize the property. Exceptions to the Rule   Now, as with every rule, there are some exceptions. This means that in some cases, relatives are held responsible for unpaid taxes if:   They co-signed for a loan that remains...

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