Many tax payers in the United States need the tax relief options that are presented through federal programs. If you’re looking to find a tax professional I, Marta Torres, along with my Liberty Taxes and Business Services partners, can help tax payers receive the benefits they are due. If you are in a financial hardship and need tax relief, contact our office to speak to a qualified tax preparer or accountant about your unique situation.
What is Tax Relief?
Tax relief comes in many forms. For those who cannot file their taxes by the deadline, or who cannot afford to pay the taxes they owe, there are federal programs that can help you avoid penalties. For others, tax relief can come in the form of tax exemptions. Either way, tax relief does not negate your responsibility to pay your taxes, it only eases your overall income tax burden.
What it Means to be Tax Exempt
For some organizations and business entities, it is possible to be deemed tax exempt. Most tax payers are allowed to claim a tax exemption as well, depending upon their filing status and the number of dependents in their home. Being tax exempt and claiming a tax exemption are two completely different ideas. This is one reason why it is important to find a tax preparer in your area who will work with you when filing your income taxes.
Personal Tax Exemptions
Personal tax exemptions are similar to deductions, in that they lower your total gross adjusted income. Lowering this income total is the key to paying less taxes, as the percentage you are taxed is based on that magic number. Adult tax payers, who cannot be claimed as a dependent by anyone else, always have the ability to claim one personal tax exemption, themselves. Additionally, married couples who cannot be claimed as dependents may claim two personal tax exemptions, as long as they are filing a joint tax return.
Dependent Tax Exemptions
Aside from claiming a personal tax exemption, many adults can also claim exemptions on their dependents. To qualify, those dependents must meet certain criteria. Children are the most common dependents claimed. Your child must be under the age of 19, and live with you for more than six months of the year. Children under the age of 24 who are full time students may also be claimed as a dependent, even if they reside in student housing. In some cases, the dependents you claim for tax exemption may include other people who are not your children, such as elderly parents or relatives that you support.
State and Local Tax Exemptions
Some tax payers who are also business owners are eligible for state and local tax exemptions. This could come in the form of leniency on one's property taxes or sales tax. To qualify for these exemptions, the business owner must meet specific state mandated regulations. In other cases, the general tax payer find relief from the state tax through tax holidays. These are common during the month leading up to the start of the public school year, offering tax free days on purchases related to back to school items.
Tax Exempt Businesses and Organizations
The purest form of tax relief comes in the form of tax exemption status. This is only applicable to non-profit and charitable businesses or organizations. An entity whose sole purpose is to better the community or nation must file for this tax exemption status with the Internal Revenue Service. If granted, then the charity does not have to pay any state, local, or federal taxes. Churches are a common example of tax exempt organizations.
Being Deemed Non-Collectible
In situations where you simply cannot afford to pay the taxes you owe, the IRS may determine that you are non-collectible. This only occurs if you are in true financial hardship. If you can demonstrate that making payments upon your owed taxes would place your livelihood in jeopardy, the IRS will defer your back tax bill for a period of time. Eventually, the owed money will need to be paid through and installment program or other tax debt solution.
Income Average Relief
As the economy changes, so does your income. This is why the income averaging relief program was created. Tax payers who owe back taxes may find themselves unable to pay because their current income is far less than their previous income. Struggling economies, natural disasters, and job loss can affect your yearly income in substantial ways. The IRS allows some tax payers to average their income over the last few years, thus lowering the total amount they may owe.
Innocent Spouse Relief
Married, and even divorced couples, may sometimes claim innocent spouse relief. This option, also known as claiming an injured spouse form, only applies in specific situations. In essence, claiming this relief keeps one spouse from being penalized from the past financial and tax decisions of the other spouse. If the husband defaulted on his college loans a decade ago, the wife can file the injured spouse form so she is not forced to pay for his error.
Tax relief can come in many forms, so get in touch to discover the best method for your personal or business income tax needs. Finding the right tax professional to assist with relief efforts is the best step you can take toward income tax resolution. Only a skilled accountant or tax preparer has the ability to remove the pressure and financial stress associated with income tax hardship.
