What is the Federal Fresh Start Program?

The IRS created The Fresh Start program in early 2011 to help aid struggling taxpayers. They expanded the program in early 2012 to provide even more relief for people who are mired in tax debt. Here are the relief programs offered under the original and the new Federal Fresh Start Program.

Penalty Breaks

Taxpayers who were unemployed for at least a month in 2011 or before April 17, 2012 are exempt from failure-to-pay-penalties as long as they pay their taxes before the federal deadline. Additionally, taxpayers who qualify for this program can get a six-month extension before their taxes are due. The 2012 due date for the extension is October 15. This program is also available to anyone who is self-employed and experienced more than a 25% reduction in income.

Payment Agreements

If you cannot pay your entire tax bill before the federal deadline, you may qualify for an installment agreement that allows you to set-up a payment plan with the IRS. The only conditions are that you can own no more than $50,000 in taxes and you have to allow the IRS to withdraw money from your bank account every month. The penalties are for doing this are lower now, although you will accrue interest. Small businesses are also eligible for an installment agreement if they owe less than $50,000 dollars or they can lower their debt to under the $50,000 threshold.

Offer in Compromise (OIC)

You may actually be able to pay back less tax than you owe under the Fresh Start Program. The IRS determines OIC eligibility based on your income and personal assets. If the IRS feels you can pay your debt in full or with an installment agreement, you will not be eligible for the tax reduction.

Tax Liens

If you do not pay your taxes, the IRS can put a lien on all the property you own. Starting in 2011, the IRS raised the dollar amount of taxes you owe before the file a lien. They also streamlined the lien withdraw process internally so that if you do encounter this problem, you can get the lien withdrawn quicker after you settle your debt. Additionally, if the IRS does put a lien on your property, you can have it removed it you enter into a payment agreement.

Believe it or not, the IRS is not out to get you. If you are having trouble paying your taxes, visit irs.gov. The IRS website is home to volumes of advice on how to deal with your tax problems including the forms you need and even a series of eight YouTube videos on how the IRS handles collection efforts. Do not wait until it is too late, visit the IRS website today and see what kind of help you qualify for.

About the Author: Julio Pasco is a personal consultant who helps his clients with budgeting and day to day tasks. He spends a lot of time looking for discount and coupons for area attractions so that his clients can learn to save while still enjoying life.

Don’t Waste Your Tax Refund: Make it Work for You

If you are one of the several million Americans who is anticipating a sizable tax return refund this year, then you know how very exciting the prospect can be. There are just so many things you can do with that lump sum of cash, right? However, the truth is that most people have great intentions for how they will make use of their tax refunds, only to put it into the checking account and watch it dwindle away on trivialities. The only way you can avoid this situation is to put some careful consideration into how to best reap the rewards of paying your taxes all year. Don’t waste your tax refund. Instead, make it work for you. Here are some ideas for how:

Retirement savings plan. Tax refund time is the perfect time to set up your 401K. Make an appointment with a financial adviser to size up your options (or take advantage of your employer’s 401K program, especially if your employer offers company matching). Contribute as much as the program of choice will allow for, or the total amount of your refund – whichever is greater.

Investments. Have you always been interested in learning how to grow your money through investment instruments? Well, now is the time to do it. Again, this is where a good financial adviser comes in. Weigh out all of your options carefully, and if you have enough money to break into more than one investment, experiment diversifying with some high-risk and some low-risk investment vehicles.

Getting out of debt. Is your mounting credit card debt beginning to eat up the money you could be putting toward saving and investing for your future? Then before you even consider using your tax refund for anything else, pay off that debt! Think of it this way: all of those fees and interest payments will compound the amount of money you owe over the long run – and that equates to more debt than any interest you’d make on an investment.

Your goals. Is there something you’ve been wanting to do for a long time that you just haven’t had the funding for? Perhaps it’s a small business venture, or even a European excursion. Consider your goals and dreams in life, and then consider how much they might cost you. It could be that tax refund time is the perfect time to have the experience of a lifetime.

As you can see, your tax refund can be a great opportunity to get ahead in a number of different ways. Consider these smart choices when you get that long awaited check in the mail, and make this year’s tax refund really count.

About the Author: Jamey Vazguez applies her tax refund to her investment goals and retirement plans every year. She usually keeps about $100 and applies it to some of the best Los Angeles deals she can find, to treat her family, but the rests is invested in her future.

How to Choose a Tax Professional

Your taxes are very important, and they’re something you don’t want to screw up. If you don’t feel comfortable doing them yourself, you’ll want to hire a tax professional to do them for you. Hiring someone to do your taxes can be costly, but it can also save you lots of time and headaches, and it can help you maximize your return. It’s incredibly important to hire someone who is both trustworthy and knowledgeable. Here are some tips on how to choose a tax professional.

Types of Professionals
There are two types of tax professionals that are usually best: enrolled agents (EA) and certified public accountants (CPA). Enrolled agents are licensed by the IRS, and they’re required to constantly continue their tax education. Certified public accountants are licensed through state exams and have met education requirements. It’s a good idea to go with either an enrolled agent or a certified public accountant. These tax professionals will be listed with either the American Institute of Certified Public Accountants (AICPA) or the National Association of Enrolled Agents (NAEA).

Tax Preparation Chains
There are also lots of tax preparation chain offices that can help you prepare your returns, such as H&R Block and Jackson Hewitt. While they may be much cheaper than hiring an EA or CPA, you get what you pay for. Tax chains often use seasonal employees that have been quickly trained. They’re just not as reliable as other trustworthy professionals. If you have a very simple return, you might consider getting it prepared by a chain. However, remember that you’re ultimately responsible for your own return.

Referrals
Check out the AICPA or NAEA for directories of tax professionals near you. Or, ask around for referrals from your trusted friends, family, and co-workers. Lots of people you know may have someone they’ve been using for years that they’ll be happy to suggest to you. Whenever you get a referral, be sure to still ask important questions and check on their certifications and qualifications.

Background Checking
You’ll want to thoroughly check out any tax professional before you hire them. Your money and your taxes are incredibly important to you, so you want to take care when entrusting anyone else with them. You can perform a background check, and check with the Better Business Bureau to make sure your professional has never been accused of fraud or anything criminal. Ask them for their Preparer Tax Identification Number, and check their certifications with either the AICPA or NAEA. Finally, ask them for some references and follow through with contacting them.

Compatibility
You want to make sure a tax professional is compatible with your own personality. Do you feel comfortable with that person doing your taxes? Also, find out how they run their business, such as how and when they can be reached, and what services they perform. Hiring a CPA or EA may be costly, so make sure you know exactly how you’ll be charged. Ask them what happens if your tax return ends up being audited, because you’ll want someone who will represent you. Most importantly, make sure your tax professional is experienced with the type of taxes you need prepared, and find someone who will work with you to find the best outcome for you.

K. Villareal is a personal financial counselor. To make sure her clients understand her advice, she always uses a grammar checker.