Friday, March 30, 2012

The IRS has a Deal for You!

Normally, when the government says, “I’m here to help you”, I would advise you to run like heck! But the IRS’ Fresh Start initiative looks like it may actually bring some needed relief to unemployed folks, as well as those who have hit upon hard times.

If you meet these criteria, you can get a little extra time to pay, and can eliminate some of the more heinous penalties the government usually docks you if you file late:

·         If you’ve been unemployed for at least 30 consecutive days during 2011 (or during 2012, up to the April 17 tax deadline)
·         If you are self-employed and have experienced a reduction in business income of 25% or more in 2011 (primarily as a result of the economy)
·         Your adjusted gross income must be less than or equal to $100,000 ($200,000 if married filing jointly). Your 2011 balance due must be less than or equal to $50,000

If you meet these parameters, the IRS will give you an extra 6-months (to October 15) to pay your taxes, and…while you will be charged interest on your unpaid taxes, Uncle Sam will not charge you a “failure-to-pay penalty), if you pay your tax debt in full by October 15, 2012.

As well, the IRS is giving taxpayers several options for payment, including:

·         Short-Term Extension of Time to Pay, if you can pay within 120 days
·         Installment Plan Agreement, for taxpayers who owe $50,000 or less (note, there are some provisions for those who owe more than $50,000)
·         Offer in Compromise, for taxpayers who have endured significant financial upsets, who seek a settlement (a compromise) on the tax debt they owe

The most important thing for you to know: Don’t let April 17 go by without contacting your tax preparer or the IRS to make arrangements for payment. If you ignore the deadline, you will find yourself steeped in penalties that will make a bad situation worse. My advice: Take advantage of this unusual generosity of the IRS

1 comment:

  1. Sounds like a good deal to me! IRS has a soft spot for unemployed taxpayers, as long as you complied with all the requirements. Still, taxes should be paid so we can take full advantage of the benefits we get from the tax collection. Lauren Padilla