In today’s world, it’s no surprise that there are increasing concerns about financial hardships. This is especially true for those that owe back taxes. In fact, back taxes owed or even unpaid taxes can make financial hardship even worse. However, there are solutions that can be undertaken for financial hardship.
Types of Financial Hardship
The following are common examples of financial hardship:
Student Loan Hardship
Student loan hardship means that the monthly amount owed is too high for what you make. Frequently, student loan lenders will work with you, but you must be eligible for certain programs. Regardless, you still may face financial hardship.
Credit Card Hardship
Credit card hardship programs are often payment plans negotiated with the credit card in exchange for a short-term fee waiver or lower interest rates. There are different types of programs to help during the recovery process. In fact, it has been argued that the sooner someone requests help, the better opportunity of obtaining help from multiple choices. Waiting can limit the options available. Hardships are based on individual cases and can be caused by:
- Pay cut
- Family emergency
- Serious illness
- Natural disaster
Service members have alternative options.
General Financial Hardship
General financial hardship can occur due to the same reasons as credit card hardship. For businesses, financial hardship is more complicated. Businesses can be impacted by the market, regulations, legislation, and many other factors outside of their control. For instance, businesses cannot control problems with suppliers, such as instances when suppliers go out of business or changes in prices. Businesses also cannot control whether or not customers purchase products. This can have a domino effect on individuals.
For example, if revenue in businesses decrease, there is a greater likelihood that there will be difficulties in covering expenses, such as salaries. To combat this, some businesses may lay off employees or cut hours. While this is understood, it exacerbates the problem because individuals then have less money to spend. It’s easy to see the cycle that can develop from these problems.
Side Effects of Financial Hardship
First off, there are warning signs that financial trouble is looming. Here are some of the most common signs:
- High credit card balances
- Using credit to pay expenses when unable to pay credit card balances in full
- High debt to income ratio
- Using high-interest loans or cash advances
- Juggling bills
- Only paying the minimum balance
- Increased late or over-the-limit fees
- Reduced credit score due to high balances and/or late payments
Financial trouble has its own unique set of stressors, such as loss of savings, home, jobs, retirement, and belongings. Other issues are related to emotional and physical impact.
These side effects can be influential in a multitude of ways, including leading to health problems. Health problems, often worsened or brought on by stress, can lead to increased financial hardships due to the increasing cost of medical care.
Financial Hardship Relief
When it’s hard to make ends meet, you may not be able to have more added to the burden. However, you can’t ignore the IRS. There may be an option though to avoid sending payments or taking money from household bills. By filing for financial hardship, you may get a temporary reprieve from your tax obligation.
First, you have to fill out the right IRS form. If it’s for an individual (even if a joint return), you’ll fill out IRS Form 433-A. If it’s for a business, you’ll fill out IRS Form 433-B. Regardless of the form, the information is pretty straightforward. You’ll be giving information about who you are, your finances, and your household. For example, you’ll need to provide:
- Identifying numbers (such as social security numbers)
- Information about dependents
- Physical address
- Phone number
- Type of house
Employment information will also be required, such as:
- Employer name
- Employer physical address
- Employer phone number
- Paycheck stubs copies
- Employment length
- Work duties
Information about employment will be a major part of the decision by the IRS on whether or not you qualify for a financial hardship. To ensure there is an informed decision, the IRS will also request bank information, such as the name, type of account, other income available, legal proceedings, and expenses. You’ll have to give information about:
- Medical bills
- Personal expenses
Learn More About Filing for Financial Hardship
All of this information may be important because it may help prove that you cannot pay your tax debt without undue financial hardship. You’ll also have to give a copy of your most recent tax return. However, if you have missing tax returns, you may be ineligible for financial hardship relief.
The IRS doesn’t want to spend its time chasing delinquent taxpayers. They’d much rather work with you. Moreover, as compared to common misconceptions, there is much compassion in the IRS, which leads to the installment of different rules, such as the Fresh Start Program. This program allows for payment agreements to be made based on what the individual (or business) can pay without experiencing undue hardship. At the same time, options also exist to counteract hardships. Without individuals working, the IRS knows it won’t get paid. Therefore, it’s in its best interest to work with tax payers to resolve problems and reach compromises.
Get Help Today
However, to do this, you’ll need help. You’ll need a powerful tax attorney, such as one from Silver Tax Group. We can help you navigate the rules of the IRS and complete paperwork to get the relief you need due to hardship. We offer compassionate and caring services in our efforts to help you improve your financial (and potentially, personal) life through helping you deal with the IRS in an effective way that is the least inexpensive solution.
Financial help is often needed by the best of us and relief programs are available. However, many of these have multiple requirements that may be confusing for many taxpayers to understand easily. Contact Silver Tax Group to see how we can help you get the relief you need from the IRS. We want to work with you in making your life easier.