Have you ever heard of tax relief and wanted to learn more about it? You’ve just landed in the right place because, in this article, we’re going to discuss what is tax relief and how you can obtain it.
What is tax relief?
With the term “tax relief,” we refer to a plan that the government can allow individuals or companies to help them go through a period of economic crisis. How is the help provided?
Relief can come in different forms and types of help:
- Payment plan: you can obtain an agreement with the government or fiscal authorities to pay your debt in smaller chunks.
- Tax cut: you can obtain a cut in the amount of taxes you need to pay.
- Tax cancellation: Your taxes can even be canceled so that your debt disappears. Of course, tax cuts and tax cancellations can be allowed only in special circumstances, for example, if a disaster hits your house or company.
Types Of Tax Relief
You can get tax relief in various forms such as tax deductions, tax exclusions, credits, etc.
1. Tax Deductions
Tax deductions can help you in reducing your total taxable expenses. This includes:
- Sales tax
- Health insurance premiums
- Interest on mortgage or student loans
- Charitable donations
- Work or business related expenses
- Property taxes
Apart from this, all the taxpayers qualify for standard deductions.
|Filing Status||2023 Standard Deduction|
|Head of Household||$20,800|
|Married Filing Jointly||$27,700|
|Married Filing Separately||$13,850|
2. Tax Exclusions
Tax exclusions, too, allow you to reduce your taxable income, but they leave an entire stream of income from your taxable earnings. Tax exclusions may include:
- Disability payments
- Housing or rent subsidies
- Income earned from other countries
- Payments for natural disaster relief
3. Tax credits
Tax credits are really great as they help you in reducing your actual tax bill to a very large extent. There are different kinds of tax credits available for different situations. For example: if you owe $12,000 in annual taxes, then a credit might reduce it to $10,000. You may get tax credits for the following:
- Childcare costs
- Having a child or other dependent
- Solar energy system
- School-related expenses
- Elderly or disabled
- Contributing to a retirement plan
- Adopting a child in that tax year
Other Types Of Tax Relief Plans
If you have accumulated tax debt or penalties over the year and need help to deal with it, these tax relief plans might help you:
1. Payment Plan or Installment Agreement
In this, there are three payment plans or installment agreements that you can choose from:
|Short-term payment plan (120 days or less)||– for individual tax payers.|
– $0 fees.
– you can apply online if you owe $50,000 or less than this.
– pay from money order, online, bank account, debit or credit.
|Long-term payment plan option 1 (Over 120 days)||– pay monthly payments automatically.|
– for businessess and taxpayers.
– $31 to $107 setup fee.
– can apply if you owe if you are an individual who owe $100,000 or less and $25,000 for businesses.
|Long-term payment plan option 2 (Over 120 days)||– for businesses and taxpayers.|
– $149 to $225 setup fee.
– apply online if you owe $25,000 (business) and $100,000 or less for individual.
– online payment, debit/credit, check, bank account, money order.
2. Interest Abatement or Penalty Relief
You can get penalty relief or interest abatement if you are hit with penalties, high interest, or administrative fees.
For this, however, you will need to qualify and provide proof as to why you were unable to pay on time.
Natural disasters, death in the family, house fires, etc., are examples of what the IRS calls “reasonable cause.”
How To Get Rid Of IRS Tax Debt?
How can you obtain tax relief?
Of course, if you want to delay, cut, or delete your taxes, you need to obtain permission and agreement from the government.
You can choose to interface with the fiscal authorities in the first person, but the ideal path is to hire a tax relief professional expert.
There are a lot of agencies available that can provide these types of services for you: they’d gather information from you (how much is your debt, why and how you’ve grown it, why you can’t pay it if you’ll be able to pay it in the future) and they’ll present your requests to the government.
These professionals can let you know what kind of solutions are more suitable for you so that your chances of obtaining relief are higher.
Does tax relief have a cost?
This may seem a contradiction, but it isn’t. As we’ve mentioned, if you want to have a good chance of obtaining this relief, you need to hire a professional in the field, and professional services have a cost.
So, yes, it can have a cost.
So, when you start wondering if you should ask for relief, try to put anything on the table: your debt, the amount of money you can save if you obtain tax relief, and the amount of money you’ll need to pay to the agency.
This is why the best tax relief agencies always provide a quote so that you can get a precise idea of the expenses before hiring them.
How to obtain tax relief?
If we want to some up the steps you need to take to obtain this relief; we can provide a short guide:
- Contact more than one studio
- Describe your needs to the firm and have them provide a quote
- With quotes in your hands, evaluate whether the relief procedure is convenient for you and pick the most convenient firm
- Proceed to make a request for relief with the firm
There are a lot of nuances to Tax relief and how it works. In this article, we saw what it mean by tax relief, how it can help a taxpayer, what are different types of tax relief options available, and many other things. We hope you found this useful.
What will happen if I do not repay my tax debts?
Non-repayment of tax debts has serious consequences. It can lead to additional penalties, interest costs, etc.
The IRS can file liens or levies against your property; they can revoke your driver’s license or passport. They can also start garnishing your wages.
How is tax credit different from tax deduction?
Tax credits lower the tax amount that you owe, while tax deductions decrease your taxable income.
In the end, both help in saving money on your tax bill, but tax credits helps in substantial savings.
How long can a tax relief claim take?
Upon receiving your application, tax relief claim can be issued to you within 8-12 weeks. This can be longer or shorter.
Shefali Jain is a Content Editor & Writer at National Planning Cycles.
After completing her graduation in hospitality, Shefali decided to follow her passion and started writing. Shefali has been writing for two years now and contributes to our website as a skilled editor and content writer with strong research skills. Writing product and service reviews, biographies, and book reviews are some of her key areas, among many others in which she specializes.