If a payment plan, as discussed in last week's post is not a desirable option, Minnesotans may want to explore an IRS tax settlement, often called an "Offer in Compromise," which is similar to any other debt settlement agreement. The process requires the individual or business to submit one of two different completed forms and pay an application fee of $150. The taxpayer must also submit a cashier's check or money order of at least 20 percent of the offer amount along with the application fee.
Comparing an IRS payment plan versus a tax settlement - part 1
People in Minnesota or elsewhere who work for themselves know paying income taxes falls solely on the filer and can often result in owing the federal government taxes every year. Even if you owe taxes and are unable to pay them in full it is important to still file on time as the penalties for not filing can make matters far worse. Failing to file a tax return can result in the IRS filing its own substitute return which may result in a higher tax debt than had you filed it yourself.
Mortgage debt forgiveness act renewed for 2013 by lawmakers
Some Hennepin County homeowners may be relieved to learn that the Mortgage Forgiveness Debt Relief Act was renewed by lawmakers last month. The act gives homeowners who participated in a short sale or other transaction which resulted in part of their mortgage debt being forgiven a break on what would normally be considered taxable income. Anyone who falls under this tax break and had cancelled debt of more than $600 should receive a Form 1099C, which is a Cancellation of Debt from their lender.
