Federal Tax Relief
Getting federal tax relief is something that a lot of taxpayers have to worry about. If you cannot pay your tax bill, you can feel overwhelmed and not know where to turn. The IRS can garnish a large part of your wages, typically 25 percent, to collect their tax amount. There are few tax relief options available that can help resolve your tax problems.
Individual Income Tax
The Act phases in a reduction in tax rates, eventually lowering the 28%, 31%, 36%, and 39.6% brackets to 25%, 28%, 33%, and 35%. The existing 15% bracket will be split into 10% and 15% brackets. The creation of the new 10% bracket has generated the retroactive relief that will come to taxpayers this year in amounts ranging from $300 for singles to $600 for married couples.
In a short sale, a lender usually forgives a portion of the mortgage, and that forgiven amount is considered income to the seller. The Mortgage Forgiveness Debt Relief Act allows sellers to submit IRS Form 982 with their tax return so they won’t have to pay taxes on that forgiven mortgage.
When a tax law changes that will result in a tax refund, you can opt for either receiving a check from the federal government or having the amount directly deposited to your checking account. If you would prefer that your tax refund be sent directly to your bank or applied to your taxes for the following year, simply complete lines 73 and 74 on your Form 1040.
The Mortgage Forgiveness Debt Relief Act does not apply to other kinds of debt forgiveness or cancellation, such as those for credit cards or student loans. In most cases, those are still considered federally taxable income and are reported to the IRS.
If you are retired or disabled and receive benefits from Social Security, SSI, Veterans Disability or Railroad Retirement, you may not file a tax return, so the Congress may increase your payment to provide equality in any economic recovery plan. For example, it has agreed to a one-time increase in the payment received by those people by $250.
In order to receive any type of federal tax relief, one must file an appeal with the IRS or government agency stating the reasons behind the failure to pay. Hiring an experienced tax attorney is a good idea, when feasible, because these professionals know the ins and outs of the tax system and can help individuals find options that everyday citizens may not be aware of. If an attorney is out of the question financially, it may be possible to find one who will do the job for free, or pro bono. To find a lawyer who will work pro bono, contact lawyers in the area or write to the closest bar association for information.