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Friday, May 3, 2013

Top 5 tax relief tips

To receive an automatic tax filing extension submit a complted Form 4868 to the IRS
Six-month tax extensions are frequently granted by the IRS

Most people feel a sudden sense of fear when the subject of taxes comes up. The Internal Revenue Service (IRS) is seen as a cold-hearted overlord just waiting for Americans to default on their tax bill. 

While those fears are not unwarranted, it's important to remember that their primary role is to fund the government. Thus, it's in their best interest to be helpful to people who owe money. The IRS has launched programs such as the Fresh Start Initiative aimed at helping taxpayers pay their outstanding tax bills. Consider our top 5 tax relief tips associated with this helpful initiative. 

  • Get more time: Steps the IRS has taken in recent years show they recognize many taxpayers are struggling financially. As a result, they are encouraging people to ask for an extension. Take the initiative to ask and most likely you will receive. The minimum grace period extended is 120 days. You can request an extension through the IRS website or by calling their main phone number.
  • Make payments: The IRS wants to collect their money and are eager to facilitate payment options. Requesting an installment plan can lessen the burden of your tax bill and give you more time to pay. The Fresh Start Initiative gives qualifying tax payers up to 72 months to pay in full. Taxpayers who owe less than $25,000 can easily apply for an installment plan online without submitting financial records. Note that interest charges will apply, though. The IRS refers to this provision as "streamlined installments."
  • Get a loan or use credit: While the IRS installment plan is a nice provision, interest rates can be heavy. Traditional bank loan rates are usually much lower. Consider getting a loan, paying off your tax debt and avoiding the IRS interest and penalties. Paying on-time, even if you have to borrow the money, is better than being a delinquent taxpayer. If you have the credit available, consider charging your IRS bill on your credit card. As noted above, the interest rate on your credit card is most likely much lower than the interest and fees charged by the IRS. Ideally, find a card that offers a zero percent introductory rate. Pay it off within the low-rate period and pay nothing in interest and fees.
  • Skip the fees: Ask about reduced installment fees. The standard charge for paying installments is $105. However, if you opt to have the payments automatically deducted from your bank account, you can save $53. Additionally, low income individuals can qualify for fees as low as $43.
  • Consult the professionals: As the world's most powerful collection agency, the IRS is adept at their job. You need professionals on your side too. Consulting with an accountant or tax attorney is the best way to find the options that best fit your circumstances. Don't delay. The quicker you can clear up your tax debt, the better. 

About the author: Shahrin writes for Miron a Tax Relief specialist from Optima Tax Relief. She loves to write about Finance, Insurance and Banking niche.

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