In 2024, the United States tax system is expected to become more complex and challenging for taxpayers. With new policies and regulations being implemented, it is crucial for individuals and businesses to be aware of the most effective tax resolution strategies.
Tax resolution refers to the process of resolving tax issues with the IRS, such as unpaid taxes or audits. It involves negotiating with the IRS to reach a compromise or payment plan that is agreeable for both parties.
Here are seven tax resolution strategies that you need to know in order to navigate the changing tax landscape in 2024.
1. Installment Agreements
Installment agreements, also known as payment plans, allow taxpayers to pay off their tax debt over time instead of all at once. This can be a helpful resolution strategy for those who cannot afford to pay their entire tax bill upfront. The IRS offers different types of installment agreements, such as short-term and long-term plans, depending on the amount owed.
2. Offer in Compromise
An offer in compromise (OIC) is a settlement option that allows taxpayers to settle their tax debt for less than the full amount owed. This is a viable option for taxpayers who are unable to pay their tax bill in full or if paying the full amount would cause financial hardship. However, the IRS will only accept an OIC if they believe it is unlikely that the taxpayer can pay off their debt in full within a reasonable time frame.
3. Innocent Spouse Relief
In certain situations, a spouse can be relieved of responsibility for paying taxes, interest, and penalties on a joint tax return. This is known as innocent spouse relief and can apply if one spouse was unaware or not involved in the misreporting of income or other errors on their joint tax return.
4. Penalty Abatement
Taxpayers who have been hit with penalties for failing to pay or file taxes on time may be eligible for penalty abatement. This is when the IRS removes some or all of the penalties assessed, resulting in a lower tax bill.
5. Currently Not Collectible Status
If a taxpayer is unable to pay their tax debt due to financial hardship, they may qualify for currently not collectible (CNC) status. This means that the IRS will temporarily stop collection activity until the taxpayer’s financial situation improves.
6. Audit Representation
Being audited by the IRS can be a daunting and stressful experience for any taxpayer. That’s why having proper representation during an audit is crucial. Tax professionals who specialize in audit defense can help taxpayers navigate the process and ensure they are treated fairly by the IRS.
7. Seek Professional Help
With an increasingly complex tax system, seeking professional help can be a crucial strategy for resolving tax issues. Tax attorneys and enrolled agents are licensed professionals who have expertise in tax law and can provide valuable guidance and representation when dealing with the IRS. They can also assist with negotiating settlements or payment plans.
In conclusion, staying informed and understanding the various tax resolution strategies available can help taxpayers effectively navigate the changing tax landscape in 2024. Whether it’s through installment agreements, offers in compromise, or seeking professional help, there are options available for resolving tax issues with the IRS. It is important to carefully consider all available strategies and choose the one that best suits your individual situation.