Tax debts can be overwhelming, but the Internal Revenue Service (IRS) has a program designed to offer relief to struggling taxpayers – the Fresh Start Program. This initiative has been a game-changer, offering a lifeline to individuals and businesses facing sizable tax debts.
But how do you become eligible for this program? Here are key steps to ensure your eligibility.
Understand The Concept Of Tax Relief
The first step in becoming eligible for the Fresh Start Program is understanding what tax relief is and how it works. Tax relief refers to programs and strategies aimed at reducing the tax liabilities of individuals and businesses.
The Fresh Start Program is a form of tax relief, which includes various provisions designed to make it easier for taxpayers to pay off their debts and avoid harsh penalties.
Meet The Basic Income Requirements
To qualify for the Fresh Start Program, you need to meet certain income requirements. For individual taxpayers, your adjusted gross income must be less than $100,000. For businesses, the business must owe less than $25,000 in payroll taxes.
Pay Off Existing Tax Liabilities
You must also be current with all filing and payment requirements.
This means that you’ve filed all required tax returns and have either paid off your existing tax liabilities or have set up an installment agreement to pay them off. Failure to comply with these requirements can disqualify you from the Fresh Start Program.
Determine Your Ability To Pay
The IRS uses a specific formula to determine if you can pay your tax debts. This involves evaluating your income, expenses, and asset equity. If the IRS determines that you have the ability to pay, you may not qualify for the Fresh Start Program.
However, if you genuinely can’t pay your tax debts, you may be eligible.
Apply For An Installment Agreement
One of the key provisions of the Fresh Start Program is the Installment Agreement. This agreement allows you to pay off your tax debts in manageable monthly installments.
To qualify, you must propose a payment plan that you can adhere to, and you must not default on your payments.
Consider An Offer In Compromise
An Offer in Compromise is another provision of the Fresh Start Program. This allows you to settle your tax debts for less than the full amount you owe if paying the full amount would cause financial hardship.
To be eligible, you must provide detailed financial information to the IRS, and you must meet certain requirements.
Keep Your Future Tax Obligations In Check
Finally, to maintain eligibility for the Fresh Start Program, you must stay current with all future tax obligations. This means filing all required tax returns on time and paying any taxes owed. Failure to do so can result in removal from the program.
Image source-Pexels
Staying current with future tax obligations essentially means fulfilling two primary responsibilities. First, it is necessary to file all required tax returns in a timely manner. Late filing or non-filing can result in penalties and can jeopardize your standing in the Fresh Start Program.
Secondly, it is crucial to pay any taxes owed promptly. After entering the Fresh Start Program, it is vital to avoid accruing new tax debts. If new debts are incurred and left unpaid, this can also lead to disqualification from the program.
In Conclusion
Becoming eligible for the IRS Fresh Start Program can provide a much-needed lifeline if you’re struggling with tax debts. By understanding the concept of tax relief, meeting the basic income requirements, paying off existing tax liabilities, determining your ability to pay, applying for an Installment Agreement, considering an Offer in Compromise, and keeping your future tax obligations in check, you can put yourself in a strong position for eligibility. Remember, the aim of the program is to make it easier for you to pay off your debts, so take advantage of the help available. If you’re unsure about any steps, consider seeking advice from a tax professional. The path to a fresh start could be closer than you think.
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