Tax debt settlement is a financial solution for those who are experiencing tax problems. It is the process of resolving a taxpayer’s tax debt by using different methods allowed by the government, especially the IRS, by providing a repayment plan or by simply reducing the amount of debt. The IRS has so many ways to collect or exact payment from a delinquent taxpayer and it includes increases in the amount owed after an assessment has been made, or a lien will be attached to your property, or tax levies are issued.

The IRS provides several options to settle tax debts depending on the taxpayers’ circumstances. They may either be totally freed from paying the tax debt or just a portion of the tax owed. The first option may be an Offer in Compromise, wherein the tax payer gives an offer to the IRS and the latter will assess whether it is acceptable in accordance with their strict qualifications. Another option in settling a tax debt is Penalty Abatement which is the most common. It is a way where the tax debtor settles his debt by having the IRS eliminate the penalties being charged. The third option is Partial Payment Installment Agreement where a taxpayer pays the taxes owed gradually and which results to paying less than the actual amount owed. There is also an option designed for those couples who filed their tax return jointly and this kind of tax debt settlement is called Innocent Spouse Relief. The fifth option is by filing IRS tax bankruptcy. However, it is not considered as the best option because a tax debtor is required to pay the full amount through a payment plan. And the last option is tax debt settlement services wherein a tax relief company can asses your situation and decide which method of settlement best suits you.

It is extremely important to get the aid of a tax professional before considering the best option in debt settlement. Among these tax professionals are CPA’s or Certified Public Accountants who passed a government licensure examination. Mostly they are hired to prepare complicated or complex tax returns or those business related taxes. Other tax professionals are Enrolled Agents who are licensed by the Internal Revenue Service after passing a very difficult test or after they have worked for the IRS for a period of 5 years. Tax attorneys can also be an option. They either have a special tax law degree, an L.L.M in taxation, or a tax specialization certificate from a state bar association.

Looking for those missed tax deductions?

None of us are big fans of tax time and preparing for it sometimes requires more time than what a tax professional expends. Here are some deductions that are generally missed on tax returns. You may be entitled to these and more when you are ready to file.

They may make the difference in whether you will have to write a check, or the IRS will be writing you a check for your return this year.

Mileage calculations

You can deduct mileage for medical care. The 2009 deduction is 24 cents a mile but with small children, this can add up quickly. Don’t forget if you do charitable work at a 501 c 3 community, the mileage is also deductible.

Expenses for your job search

If you have been searching for a job in the same field before your layoff, you can deduct the expenses for your job search. This can be quite significant since you may be like so many workers that have been out of work for most, if not all of the year.

Cut gambling losses

Save your receipts! Gambling losses can be deducted to the extent of gambling winnings reported on Form 1040, line 21. They must be clearly identified on the dotted lines next to line 28.

Claim dependent parents

If you are responsible for one-half of your parent’s living expenses, they can be a dependent. Don’t forget to calculate medical expenses, housing and insurance, food as well as transportation. The parent(s) don’t have to live with you. If you paid less than 50 percent of their care, you may still be able to use the Multiple Support Declaration.

Financial Advice

If you paid for some financial advice, deduct it.

Summary

You spend about 100 days a year working just to pay your taxes. There is no joy in having to pay more taxes, so lessen the burden. Get as many deductions as you are entitled. Don’t forget that you can file amended tax returns for up to three years. Again this year, many of the large tax companies will take a look at your last tax return to determine if you are entitled to more deductions than you received.

Bio: A Coach, Director of HR, and Business Trainer, F.C. Boyd (The Unleashed Writer) is also a freelance writer, writing on a variety of subjects.  In addition to currently running her own business, she is a tax preparer and holds a certification in Mediation.  Visit her business blog at: http://theunleashedwriter.wordpress.com or if you need a dose of humor today: http://lifeonthefunnyside.blogspot.com.