Video: What If?
People facing financial difficulties may find that there's a tax impact to events such as job loss, debt forgiveness or tapping a retirement fund. For example, if your income decreased, you may be newly eligible for certain tax credits, such as the Earned Income Tax Credit.
Most importantly, if you believe you may have trouble paying your tax bill, contact the IRS immediately. In many cases, there are steps we can take to help ease the burden. You also should file a tax return even if you are unable to pay so you can avoid additional penalties.
Here are some “what if” scenarios and the possible tax impact:
What if I lose my job?
What if I receive unemployment compensation?
What if my income declines?
What if I am searching for a job?
What if my employer goes out of business?
What if I close my own business?
What if I withdraw money from my IRA?
What if my 401(k) drops in value?
What if I can’t pay my taxes?
What if I can’t pay my installment agreement?
What if there is a federal tax lien on my home?
What if a levy on my wages is creating hardship?
What if I can’t resolve my tax problem with the IRS?
What if I need legal representation to help with my tax problem but can’t afford it?
- Tax Tip 2011-68, Three Ways to Pay Your Federal Income Tax
- IR-2011-42, April 18 Deadline Approaching; Check IRS Payment Options
- IR-2011-20, IRS Announces New Effort to Help Struggling Taxpayers Get a Fresh Start; Major Changes Made to Lien Process
- IR-2010-29, IRS Outlines Additional Steps to Assist Unemployed Taxpayers and Others
- Payment Plans, Installment Agreements
- Offers in Compromise
- Tax Center to Assist Unemployed Taxpayers
Source: Internal Revenue Service at http://www.irs.gov/uac/The-“What-Ifs”-for-Struggling-Taxpayers