The average person dreads tax filing season. This season can get a lot worse if you have to pay the IRS at the end of the year. Tax debt is something millions of people in the United States have. If you feel like you are drowning under the weight of your tax debt, then finding a fresh start is imperative.
People who have a large amount of tax debt need to think about using the IRS Fresh Start program. Using the tools at your disposal is crucial when trying to crawl out from under a mountain of tax debt.
Read below to find out more about the IRS Fresh Start program and how it can help you pay off your taxes.
Read more: Top Ways to Protect Your Income from Taxes
What You Need To Know About the Fresh Start Program
The average tax debt in the United States is around $16,000. Unless you are familiar with all of the programs offered by the IRS, you probably think the Fresh Start program is new. In reality, this program has been around since 2011. This program was created to help taxpayers with debt. However, this isn’t designed to help people with federal tax liens against them.
This program helps taxpayers by doing things like:
- Streamlining and expanding Office-In-Compromise guidelines
- Increasing the tax lien triggering limit from $5,000 to $10,000
- Making installment agreements easy to obtain
- Simplifying the calculation of taxpayer’s future income
The changes made since the creation of this program have been designed to help taxpayers who struggle to pay their debts. The IRS also created tools to help people who fall behind on their taxes due to unemployment.
How Can People Quality for This Program
Now that you know more about what the Fresh Start program offers, you are probably wondering how to qualify for it. Taxpayers that are ready to satisfy their tax debt with an installment agreement are considered ideal candidates for this program. Other requisites that must be met to qualify for the Fresh Start program include:
- Tax filing must be current
- The ability to repay the debt amount in around five years
- IRS debt of $50,000 or less
- IRS tax payments haven’t fallen behind
- Willingness to use direct deposit to pay the tax debt
If you meet these requirements, then it is time to start exploring the advantages offered by the Fresh Start program.
Details About Repayment Options
If you feel like this program is the best way to address your tax debt, then you need to be aware of the payment options the IRS offers. Finding out more about these repayment options will allow you to figure out which one is the right fit for your needs.
Tax Lien Withdrawal
If you are ready to pay your full tax debt with a direct debit payment, then a tax lien withdrawal is a good option. With this payment option, you can provide the IRS with written instructions about what amount you want to be withdrawn from your bank account.
An Extended Installment Agreement
For people that owe $50,000 or less to the IRS, then an extended installment agreement might be a good fit. This extended agreement provides a taxpayer to satisfy their debts in as little as six years. When committing to this agreement, you can avoid incurring additional interest or penalties. Most taxpayers prefer using this method because it provides them with a predictable monthly payment.
Offer In Compromise
When a taxpayer offers to settle their tax debt for a lesser amount owed, it is referred to as an offer in compromise. Before attempting to get this offer approved by the IRS, you need to make sure you have the financial resources needed to pay it in place.
Instead of trying to apply for an Offer In Compromise on your own, enlist the help of a tax professional. With this professional help, you can get your offer approved.
Why Ignoring Your Tax Debt is a Horrible Idea
Ignoring a growing amount of tax debt in hopes it will go away is foolish. The longer you allow this problem to linger, the more money you will inevitability owe. This is why you need to work on using the Fresh Start program to your advantage.
Ignoring your tax debts will cause problems like:
- Automated collections
- Levies from the IRS
- Visits from a revenue office
- Being charged penalties
- Tax refund seizure
- Higher interest costs
Rather than confronting these issues, you need to seek out the advice of a tax professional. These professionals can help you apply for the Fresh Start program.
If you are currently stressed out due to high tax debt, it is time to use the program covered in this article. By using the Fresh Start program, you can make your tax debt more manageable.