The Internal Revenue System has always been tough on tax collections, but lucky for us that it offers some sort of relief for those having problems paying off their taxes.
“We have an obligation to work with taxpayers who are struggling to make ends meet,” says Douglas H. Shulman, IRS commissioner.
It is for this reason that the IRS offers the Fresh Start Initiative (FSI) and expanding the installment agreement program.
First up is the FSI. You can apply for the FSI by filling up IRS form 1127-A, and by doing so will allow you a reprieve from tax penalties until October 15. You can qualify for the FSI if you have been unemployed for at least 30 days in 2011 or up to April 17 of this year.
If you’re a business owner, you may also qualify if your business has seen a 25% or greater hit in income because the bad economy in 2011.
This is significant because of the severe tax penalties of paying late, including a maximum 25% penalty on your unpaid taxes. Being accepted in the FSI will waive these penalties up to October 15, but income limits do come into play. You can also be eligible for the FSI if you owe not more than $50,000 on taxes last 2011.
Then there’s the installment agreement program.
The IRS can let you pay up to $50,000 in monthly payments instead of in one lump sum. This used to be $25,000, but then the IRS doubled it to make room for the tough economy this past year. You can even pay off your taxes over 72 months instead of the old 60 months – a total of 6 years instead of five.
These can be especially useful once tax season comes around the corner and you aren’t quite ready to pay off all those bills at once. Visit www.irs.gov to learn more about the Fresh Start Initiative and the installment agreement program.
If this is the first time you’ll be doing your taxes as a single mother, here are some of the more common tax breaks for single mothers for you to keep in mind when you fill your tax returns.