Tax relief is an umbrella term for a variety of programs and initiatives by the US government that allow individuals as well as families to reduce their overall tax liability. This may be in the form of tax credits, installments or offer in compromise among several other programs. However, one needs to be eligible to claim any sort of relief under such programs. Remember that eligibility could be different for different programs.
Following is a general guideline regarding eligibility for tax relief in Laguna Beach, CA.
General Guideline To Be Eligible For Tax Relief in Laguna Beach, CA
1: Age, Filing Status and Disability
“Standard Deduction” is a fixed amount for each year that reduces your taxable income. For 2022, standard deduction for a single filer is $12,950.
What it means is that a single filer needs to pay tax on any income earned in addition to initial $12,950 only. However, one may be able to increase this standard deduction. This largely depends on your circumstances. For example, for a married couple filing joint returns, this amount is $25,900.
This is double the amount for a single filer. Hence, if circumstances favor, a married couple should file joint returns. Same is the amount for a surviving spouse.
Similarly, the standard deduction amount may be increased if a filer is over the age of 65.
In this case, there is an increase of $1,700.
A blind individual is also eligible for such increase.
Similarly, a certain deduction may be allowed if you are dependent on another taxpayer.
2: Itemized Deductions
The IRS allows certain expenses to be deducted from your taxable income as long as you meet the criteria. However, you may not be able to claim standard deduction simultaneously.
It all depends upon weighing both options and choosing the most profitable one.
Normally, the following itemized deductions are allowed.
Charitable donations to registered organizations.
Dental and medical expenses not reimbursed by your employer or insurance.
Payment made in terms of mortgage interest. However, a set of conditions need to be met. For example, a mortgage should be a secured debt and a claim can be made on interest of first $750,000.
Payment made in respect of various local and state taxes.
Investment interest expenses.
Similarly, some other itemized deductions may also be allowed. Make sure to check with the IRS or your tax consultant for further details in this regard.
3: Inability to Pay Taxes
In many cases, tax relief stems from one’s inability to pay taxes. For this purpose, one must have a genuine inability to fulfill tax liability. This needs to be proved to the IRS as per the established guidelines.
If the IRS agrees, it may allow you to pay in installments. Similarly, an Offer in Compromise (OIC) is one of the most popular ways of securing tax relief.
An OIC allows you to settle your tax debt for less than the original liability owed.
Remember that, you need to complete documentation to gain any tax relief. You must provide updated and correct arithmetic as well as a range of paperwork to prove your case. It may be easier for basic tax reliefs, such as those related to age. However, it may not be a straightforward task when it comes to claiming an OIC, for example.
Hence, it is recommended to seek professional help if you are unsure about the due process. Any error or mistake in the overall process can reduce your chances of getting any relief. Make sure you understand the eligibility criteria as well as the process of getting relief from the IRS.
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Zee Maq is a content writer who specializes in writing business and finance content. She has nine years of experience and loves to provide problem-solving content to help people tackle challenges in their everyday lives.