IRS Tax Debt Relief Options

Millions of people are suffering from the overwhelming burden and stress of tax debt. Thanks to recent changes in the tax laws the IRS has made it easier to obtain Tax Debt Relief. The new changes for IRS Debt Relief are called the Fresh Start Initiative. Not all citizens qualify for Tax Relief via the Fresh Start Initiative, and the new laws can be very confusing. Though seeking tax debt forgiveness through the Fresh Start Initiative can be helpful, if a person applies incorrectly they can be permanently banned from receiving the benefits of the Fresh Start Initiative, making it imperative that a person hires a qualified tax attorney to assist them in receiving the Tax Debt Relief they wants as regards individual solutions.

 

Overburdened with IRS tax debtWhether you need to file tax returns for multiple years, arrange some type of a payment resolution, or need to stop pending collection action, there are various IRS debt relief options available to you. Tax professionals can work with you to implement a plan of action that involves preparing all necessary tax returns and negotiating a settlement on the outstanding tax debt. At the same time, we can put a stop to ongoing collection activity and secure a hold on any future action. Speak with one of tax professionals and learn how to take advantage of available IRS debt relief programs.

 

3 Key Options For People Seeking Tax Relief

 

Each option available for Tax Debt Relief has particular criteria to be considered for the Fresh Start Initiative. Once a person applies for IRS Debt Relief the IRS has all the information they need to collect on the debt if they do not approve one of the three Fresh Start Initiative options, so it is crucial to ensure your original application is perfectly submitted.

 

Penalty Relief:

 

The IRS has a laundry list of categories, sub categories and qualifications to be eligible for debt relief through penalty relief. Some of the basic requirements is that the tax payer needs to show cause of having the tax debt, that they have experienced a loss of income 25% or higher, a loss of job, illness in the family, earn under $200,000 along with many other lesser known conditions. With the numerous options in receiving tax relief, each tax payer must be prepared to submit the best possible package to qualify for tax debt settlement.

 

Flexible installment agreement:

 

Another option the IRS has afforded a tax payer for Tax Debt Relief is the Installment Agreement. The installment agreement is for tax payers who cannot afford to pay off their debt in one lump sum. If your Installment Agreement can be accepted, the tax debtor will have a reduction in penalties allowing them to Relieve your debt issues as well as other irs tax problems

 

Offer in Compromise:

 

A person can apply for an Offer in Compromise through the Fresh Start Initiative.An “Offer in Compromise” is essentially an agreement made between the IRS and a taxpayer that allows the taxpayer to pay less than the full amount they actually owe. With this type of agreement, the taxpayer can usually choose to make a lump sum tax payment or set up an installment plan. While it might not be for everyone, the Offer in Compromise program has enabled many taxpayers to settle IRS tax debts.

 

Under the Fresh Start Initiative the IRS has expanded to a larger group of people who could qualify for Tax Debt Relief through an Offer in Comprise. To quote the IRS in regards to people seeking Tax Debt Relief: ”The IRS recognizes many taxpayers are still struggling to pay their bills so the agency has been working on more common-sense changes to the OIC program to more closely reflect real-world situations”. Generally offers will not be accepted if the IRS believes you can pay for the debt, thus making it crucial you hire an experienced and qualified tax debt attorney to prepare your Offer in Compromise allowing you to obtain the Tax Debt Relief you deserve.

 

Ways To Releive Your IRS Tax Debt

 

Installment agreement

A monthly payment plan for paying off the IRS. If you think you are a victim of a fraudulent investment scheme , where you have lost all or most of your investment, you may be eligible to take advantage the United States Tax Code (law) to recoup 30% to 40% of your losses. This highly technical and complex process can help you reduce taxes paid in previous years resulting in refund with interest.

 

Release IRS Wage Garnishment

When you owe Uncle Sam money, the IRS can levy your wages, salary, or federal payments until the levy is released, your tax debt has been fully paid off, or the time expires for legally collecting the tax. There’s room here to bargain for a release or modification to the garnishment if you don’t have enough money to survive with the levy.

 

Debt Relief Options For Veterans

Debt can be overwhelming, especially during the repayment process, so much so it's often very easy to forget other monthly or annual payments. Getting out of debt can be incredibly hard, even seemingly impossible at times. Though the road to recovery may be long, it is possible to get back on your feet after financial difficulty.

 

Some heavily indebted individuals have spent imprudently while others are victims of circumstances beyond their control like unemployment, medical emergencies or unforeseen changes in a family situation. Study reveals that members of the military accrue debt at alarming rates when compared to civilians. This debt can endanger service members’ financial lives (and their jobs) if left untouched.

Here are five reasons members of the military tend to fall into debt.

 

1) Pay is steady but small

 

“Service members may find themselves in debt for a number of reasons,” said Gerri Detweiler, Director of Consumer Education at Credit.com. “For many, the pay may be steady, but it’s not large, and that means they have to stretch their paychecks quite a bit – especially if they are helping to support a family.”

When military members are forced to squeeze every last dollar out of their paychecks, they might not be able to save enough money for emergencies at home. So if there is a family emergency, they might have to go into debt, which can easily become a downward spiral if it’s not carefully monitored.

 

2) Frequent moves prove to be expensive

 

Another reason for debt in the military is needing to move locations often. Frequent moves can add additional expenses and those moves can make it harder for a spouse to hold and advance in a good paying job. As a result, they have to pay mortgages on both their old and new homes in order to maintain good credit, which places an added burden on their financial lives. Debt can start to pile up despite their efforts.

 

3) Spouse forgets to make a payment during deployment

 

Deployment makes it difficult to stay out of debt as well. If a service member leaves a spouse at home, he or she will automatically receive all the financial responsibilities while the service member is deployed. If communication fails for some reason, the spouse at home might forget to pay a seemingly innocuous bill. But that missed payment can create larger problems if not taken care of. Because most of the financial pressure is put on the spouse at home, missed payments can lead to more debt.

 

4) More susceptible to the credit industry

 

Because of their steady, guaranteed paychecks, military members can get credit more easily and are more likely to be targeted by creditors than civilians. “Additionally, those (military) that do carry credit card debt have higher balances than their civilian counterparts,” said Karen Carlson, Director of Education at InCharge Debt Solutions. “Carrying debt, however, limits a service member’s ability to maximize other military benefits, like the Thrift savings program.”

 

5) Fear of jeopardizing security clearance

 

The underlying reason service members stay in debt once they accrue it is fear of losing their security clearance if their superiors find out about their debt. “Unfortunately, members of the military may be afraid to seek out help,” said Detweiler. “I’ve heard from service members who are deeply underwater on their homes, for example, but are afraid to get help for fear of jeopardizing their security clearance.”

 

So if they don’t acknowledge their debt and seek help for fear of losing their clearance and job, the debt will only continue to increase.

 

But nonprofit companies such as VeteransPlus and Military Debt Management Agency work to make it possible for military members to put their debt behind them. “A successful military career can lead to a lifetime of financial security if you exercise some of the discipline gained from basic training in your personal finances,” said Carlson. “We encourage service members to get out of debt and stay out of debt, with the help of nonprofit credit counseling.

 

The two ways to debt relief for Veterans can either be through self guides or professional help.

 

Self Guide – This entails creating and Sticking to budget

 

Financial Planning Software

 

Commercial software, such as Quicken Intuit, can be a very useful tool in budget planning. Sticking to a budget has never been easier, at least in theory. Budget software can track your income and expenses and does so while placing a premium on ease of use and easy to understand breakdowns of where your money is going.

 

There are also free spreadsheets you can find on the internet that can help you track your money. While they lack the sophistication of commercial software programs, they can be a useful starting point for those who are just beginning to track their spending.

 

The Old Fashioned Way

 

While computer software can be enormously useful to enable sticking to a budget, it's not absolutely necessary, and in fact many people prefer to do a budget with pencil and paper so that they can see the entire picture right in front of them. If you're one of these people, you'll need to do more work in keeping your records organized, but if you do so, you'll be fine once you get going.

 

This sounds easy, but getting over the mental hurdle of starting a budget and the initial energy it takes to track your money is the hardest part. Once you accept that there are absolutely no disadvantages to creating a budget and doing so will make your financial life easier to manage, maintaining your records becomes second nature.

 

Total Your Income

 

Take stock of every source of income that you have. If you have a regular paycheck, tally up your monthly take home pay. If you are self employed, be sure to include any income you generate as well as any outside sources of income.

 

Gather Your Records

 

After you've taken stock of your income, you'll have to spend a significant amount of time and energy into tracking your expenses. You should begin by tracking regular expenses such as mortgage payments, student loans, utilities, car payments, insurance, child support, and any other obligation that you pay each month. These are considered fixed payments, and most likely will not change much over the long term.

 

Making A Budget

 

After you've tallied up your total income and total expenses (this process will take you at least one month), you will immediately see whether your expenses overtake your income and you can begin to make decisions on where to trim the fat.

 

Sticking to a Budget

 

Making your budget is time consuming and you may feel as though you're done, but you still have to remain faithful to your budget or your effort will be for nothing. Think of your budget like a diet. You want to stay on it, but if you splurge on one day or in one area it's alright, you'll just have to make up for it in another area.

 

Professional debt relief solutions include:

 

Debt Settlement – Also known as debt negotiation or debt resolution, debt settlement involves you or a debt settlement company negotiating lump-sum settlements with your creditors. The object is to decrease the principal you own while also eventually retiring the debt.

 

Debt Consolidation – Debt consolidation means taking out a loan, which you use to consolidate and pay off all your other debts. The object of debt consolidation is to reduce interest rates and combine all of your debts into one manageable, monthly payment.Finding a Dependable Company. It takes time researching a dependable and experienced debt consolidation company. Look for companies with more than five years of experience.

 

Debt Management Plan – Unsecured debts such as credit card bills, medical bills, student loans, department store cards and unsecured lines of credit can be handled through a debt management program (DMP). The object is to reduce your monthly payments by getting a reprieve from interest rates, late fees or penalties from your creditors while promising to pay back the full principal over time.

 

Credit Counseling – Another system of debt management is credit counseling. You work with a credit counseling agency that reviews your budget and helps you evaluate all of your debt relief alternatives.

 

Many credit counseling services are nonprofit organizations and may provide counseling sessions at no cost. However, some organizations are for-profit companies and do impose fees.

 

Bankruptcy – These services come with a price because they are complicated and involve plenty of paperwork and terminology most of us are unfamiliar with in our daily lives. Many debtors turn to financial professionals for help with debt — from calling lenders for lower rates, refinancing a home or simply creating a strict budget and sticking to it.

 

Exploring Debt Relief Options

There are millions of households around the United States that are struggling with mounting debt and unpaid bills. While the economy has recovered significantly since the recession of 2008, for many people in the country, money is still very tight, they find themselves saddled with debt that they cannot pay and there seems to be no relief in prospect.

But this is no reason to get disheartened as there are several debt relief options out there, waiting to be explored. Each of the debt relief options discussed by us has its own advantages and disadvantages. You should select the one that is most suitable for your current circumstances.

Create a Budget and Pay Down the Debt

Monthly Budget WorksheetCollect your financial documents and credit card reports, and find out where you stand. Write down all the balances, interest rates, and monthly amounts due for all debts – credit card debts, auto loans, personal loans, payday loans etc. Make a note of the annual fees on your credit cards. Ignore mortgage loans or student loans for the moment as they have low APRs.

Now take a hard look at your monthly expenses and prepare an income vs. expense statement. Your expenses should include the payments made for rent, mortgage, insurance, utilities, groceries, student loans, and everything you can think of. Subtract your expenses from monthly income and find out how much you’re left with to pay off urgent debts.

Look at cutting unnecessary expenses such as eating out, cable subscription, having coffee everyday at Starbucks and so on. The more money you save, the easier it becomes to pay off existing debt. This takes patience and a plenty of personal sacrifice, but it’d be well worth it when you finally become debt free.

Bankruptcy

Bankruptcy protection is a unique way to settle your debts, but should only be used as a last resort.  During a bankruptcy Chapter 13 settlement, you pay off your debts through a detailed repayment plan, which protects your assets from getting liquidated. A Chapter 7 bankruptcy ordered by the courts protects several of your assets even as your debts get written off. Bankruptcy is the best long term protection against creditors and debt collectors.

However, bankruptcy adversely affects your credit standing for at least 10 years. Bankruptcy is recommended only if you have a very limited income and huge unsecured debts. So explore other debt relief options first before considering bankruptcy.

Credit Consolidation

Debt consolidation or credit consolidation is one of the most effective debt relief options where lenders transfer all their loans into a single loan. A big low interest loan is then issued by major banks to pay off this consolidated debt. This debt relief option is recommended for those who find themselves owing money to several lenders.

Refinancing the Home Loan

This is one of the most popular debt relief options that involves taking a new loan on your home and using the money to pay off all existing debts. Refinancing the home loans allows you to lower your monthly repayments, make only one repayment, rather than several, lower your interest rate, pay off your debts much faster and it allows you to be in control of your debts, especially credit card debt, rather than get controlled by them.

Debt Relief Agencies and Nonprofits

Most people are not financially savvy and when hit by the burden of debt, they will need help from experts. Debt relief agencies help people manage their finances better, and pay off their debts in a much easier manner.

They help relieve some of the stress involved in repayment of debts by offering professional advice that gets to the core of the issue, helping people understand where they’re going wrong, what needs to be changed, while exploring several debt relief options that might make things easier.

Debt relief experts will have access to knowledge that most people may not have, which helps greatly while deciding on the methods to be used for debt repayment. While most debt relief agencies charge a small payment for their services, there are non-profits that offer these services as well, that don’t charge you any money for their advice.

Conclusion

We hope the advice given here has been useful to you, and given you the information that you were looking for on your debt relief options. Remember, be calm, never be scared by the prospect of debt repayment, there are several excellent options available to you. And never be too shy to ask for professional guidance on the management of your debts.