If you are disabled and owe back taxes, you may be facing a challenging situation. Fortunately, there are options available to help you resolve your tax debt and avoid financial hardship. In this post, we will discuss what you need to know if you are disabled and owe back taxes, including your rights and options for resolving your tax debt.
Disability Rights
As a disabled individual, you have certain rights when it comes to your tax debt. The Americans with Disabilities Act (ADA) prohibits discrimination based on disability, including in the context of tax collection. This means that the IRS cannot discriminate against you based on your disability when collecting taxes.
Payment Options
If you owe back taxes, there are several payment options available to you. You can pay your tax debt in full, set up an installment agreement, or make an offer in compromise. Each option has its own benefits and drawbacks, so it is important to understand your options and choose the one that best fits your situation.
- Paying in Full: If you can afford to pay your tax debt in full, this is often the best option. Not only does it allow you to avoid additional penalties and interest, but it also helps you to clear your debt and move on with your life.
- Installment Agreement: You can settle your tax debt in monthly installments thanks to an installment agreement. If you are able to make monthly payments but cannot afford to pay your tax debt in full, this may be a good option for you.
- Offer in Compromise: You can also clear your tax debt through an offer in compromise for less than the full amount owed.
Disability Waiver
You might qualify for a disability waiver if your disability prevents you from paying your tax debt. Based on your disability, you may be able to have your tax debt reduced or eliminated thanks to this waiver. You must be able to prove that your disability prevents you from earning an income or paying your tax debt to be eligible for a disability waiver.
Hardship Status
Due to your disability and tax debt, you might qualify for hardship status if you are going through financial difficulty. With this status, you can postpone making payments on your tax debt or make smaller ones. You must show that your financial situation is temporary and that you will be able to pay your tax debt in the future in order to be granted hardship status.
Taxpayer Advocate Service
The IRS’s independent Taxpayer Advocate Service (TAS) assists taxpayers in resolving their tax-related issues. You might be able to work with the TAS to settle your tax debt if you have a disability and owe back taxes. Your rights can be better understood, payment options can be investigated, and the TAS can deal with the IRS on your behalf.
Professional Assistance
If you are disabled and owe back taxes, it is important to seek professional assistance. A tax professional can help you understand your options and develop a plan for resolving your tax debt. They can also help you negotiate with the IRS and protect your rights as a disabled taxpayer.
Tax Relief Programs
There are several tax relief programs available for disabled taxpayers. These programs can help you reduce your tax debt, avoid penalties and interest, and get back on track financially. Some of the most common tax relief programs for disabled taxpayers include the Earned Income Tax Credit, the Disability Tax Credit, and the Property Tax Relief Program.
Statute of Limitations
It’s important to note that the IRS has a statute of limitations for collecting tax debt. This means that they only have a certain amount of time to collect the debt from you. For most types of tax debt, the statute of limitations is ten years from the date the tax was assessed. However, there are exceptions to this rule, so it’s important to check with a tax professional to see if the statute of limitations applies to your specific situation.
Installment Agreements for Disabled Taxpayers
There may be special installment agreements available to disabled taxpayers who owe back taxes. These agreements may allow you to pay a reduced monthly amount based on your income and ability to pay. In addition, the IRS may also waive the user fee for setting up the installment agreement. To qualify for these special installment agreements, you must meet certain income and disability requirements.
Tax Forgiveness for Disabled Veterans
You might be qualified for tax forgiveness for your unpaid federal income taxes if you are a disabled veteran. Veterans who have a 100% service-connected disability rating are exempt from paying taxes under the Disabled Veterans’ Tax Termination Act. Under this program, the IRS will forgive federal income tax debt for veterans who meet the eligibility requirements. This can be a significant help to disabled veterans who are struggling with tax debt.
If you are disabled and owe back taxes, it is important to understand your rights and options for resolving your tax debt. You have several payment options available to you, including paying in full, setting up an installment agreement, or making an offer in compromise. You may also be eligible for a disability waiver or hardship status if you are unable to pay your tax debt due to your disability. It is important to seek professional assistance through tax resolution/consultation services and explore all available tax relief programs to find the best solution for your situation. With the right support and guidance, you can resolve your tax debt and move forward with financial stability.