Tax season can be a stressful time of year for many Americans – each year, around 900,000 taxpayers fail to pay their taxes on time.
If you’re facing tax problems, your best option might be to file for financial hardship. Upon review, the IRS may deem you Currently Not-Collectible, which would exempt you from your tax burden until your financial circumstances improve.
When filing a financial hardship form, it’s important to understand the process the IRS requires for people struggling to fulfill their tax obligations. Fortunately, Paramount Tax Relief has helped many Sacramento taxpayers navigate the ins and outs of this form.
The first part of the form involves identifying yourself. Necessary items include your social security number, address, phone number, and details about your dependents.
You also must include information about your employment, including details about your employer, how long you’ve been employed for, and your role at work.
The IRS needs to understand your situation in full if they’re going to relieve you of tax debts. These sections will ask you about your financial assets, including whether you have cash on hand, bank accounts, credit cards, and investments, among others.
Monthly Income and Expenses
In this part of the form, you must itemize your monthly sources of income and living expenses.
Income can include:
- Social Security
- Child Support
Expenses can include:
- Housing and utilities
- Car payments and utilities
- Healthcare costs
- Debt payments
- Income taxes
- Credit card payments
The IRS compares your expense report against their Collection Financial Standards – costs deemed necessary for one’s health and ability to produce income. The Standards set the monthly allowable expenses in most of the above categories. Some expenses, like credit payments, are not typically allowed.
Proving that you have little to no disposable income at the end of each month is crucial for the IRS to recognize your hardship. Therefore, it helps a great deal to back up your statements with supporting documents such as your most recent pay stub or, if applicable, recent or recurring medical expenses.
Paramount Tax Relief in Sacramento Can Help With Your Case Today
If you can show that meeting tax payments would keep you from meeting basic living expenses, you have a strong chance of receiving uncollectible status. However, it’s not a guarantee. Only a small percentage of people meet the requirements for this type of relief.
Luckily, our team in Sacramento knows what it takes to put together a good case for financial hardship or whether there may be better tax relief options for you. Finding tax solutions suited to unique circumstances is our bread and butter – make the call so we can help you get on top of your finances as soon as possible.