Tax relief is any government program or policy that is implemented by the government to reduce the amount of taxes paid by individuals or businesses. It may be a universal tax cut or a targeted program that benefits a specific group of taxpayers or bolsters a particular goal of the government. Tax relief is intended to reduce the tax liability of individuals or businesses.
An individual or business entity typically gets tax relief through tax deductions, credits, or exclusions, and by the forgiveness of a loan.-
·Tax Deductions
The reduction of taxable income using legal deductions is a form of tax relief. The most commonly-used federal tax deduction is the one for home mortgage interest.A tax deduction reduces the taxable income of a taxpayer.
·Tax Credit
A tax credit is another form of tax relief, and it is one that provides greater savings than a tax deduction. A tax credit is directly subtracted from the individual’s total amount of tax owed after all deductions are made.
·Tax incentive
This type of tax relief is often described as a tax incentive because it reimburses taxpayers for expenditures that the government deems worthwhile. For example, the American Opportunity Credit and the Lifetime Learning Credit programs allow tax credits to be taken by people who enrol in post-secondary education programs.
·Tax Exclusions
Exclusions classify certain types of income as tax-free or as tax relief, reducing the amount that a taxpayer reports as gross income.
·Debt forgiveness
The IRS has a program called Fresh Start <www.irs.gov/pub/irs-utl/oc_theirsfreshstartprogramcanhelpyoupayyourtaxesfinal.pdf> that offers a number of options for taxpayers to settle outstanding tax debts, often for a percentage of the original liability.^The agency can provide a tax relief arrangement to help people pay the reduced tax amounts over time and avoid a tax lien.
·Tax Penalty Relief
You may qualify for relief from penalties if you made an effort to comply with the requirements of the law, but were unable to meet your tax obligations, due to circumstances beyond your control.
If you received a notice, be sure to check that the information in your notice is correct. If you can resolve an issue in your notice, a penalty might not be applicable.
Penalties eligible for penalty relief include:
-Failing to file a tax return
-Failing to pay on time
-Failing to deposit certain taxes as required
-Other penalties as applicable.
With the Tax season fast approaching, tax payers now need to get their paperwork and the various tax details sorted out. This enables the tax payers to file returns on time and also benefit from various tax relief programs initiated by the IRS. The professional tax preparers at National tax Preparers of America will help you achieve both and have an effortless
