Do I Qualify for Financial Hardship?
by Victor Lee DIY SpecialistWell, with the recent
Covid pandemic everyone is going through financial hurdles and job losses, some
more than the others. And now is the time to file and pay your income taxes but
if you are going through financial hardship then do not worry you can opt for
financial hardship with the IRS, we have jotted down all the important details
that you need to know about financial hardships.
What is Financial Hardship?
Well, as per the IRS
the financial hardship is considered in cases where an
individual is most likely to go through unfair financial hardship due to the
outstanding taxes. You might be wondering if there is a way to qualify for currently
not collectible status, whereby you are granted some time to put away your
files until you have enough money to pay your taxes back.
How To Prove Hardship:
Well, as always to prove your
financial hardship to the IRS you will need to gather some of the paperwork and
then submit all your financial information. All these documents include Collection Information Statement Form 433A/433F for self-employed
individuals, then another Collection Information Statement Form 433B for
qualifying corporations or partnerships, you will also be needing Forms and
supporting documents reporting a list of everything you own and the market
value for each asset.
Apart from this, you will also need to submit
spending statements for the past three months. It is highly advised to prove
your disability to pay your taxes if you can since the IRS also needs
reassurance, you can refer your case to a renowned
tax relief firm and ask for their
assistance in your financial hardship so they can fix your problem with IRS on
your behalf. If you don’t want to tell the feds quite so much
about your affairs, you may wish to opt for an online payment agreement instead.
It’s easier to qualify and requires less extensive disclosure.
Who Qualifies for Hardship?
We know you want to know how exactly the
IRS considers hardship eligibility; well the
agency analyzes your financial situation by adding your total allowable living
expenses and deducting them from your total monthly income. The answer is
called your net disposable income, with which the IRS expects to pay your
taxes.
If you can prove you have little to no net disposable income, you can qualify for IRS hardship. CNC is not meant for large corporations. It is intended for individual taxpayers and small business owners. Once you have CNC status, your taxpayer information is reviewed every two years to ensure you still qualify as a hardship. An increase in income and a belief you have the ability to repay the IRS removes you from CNC status and revokes IRS hardship.
Each tax year is treated separately. The CNC does
not roll over automatically to include the next tax year. You can try to
qualify for CNC each year, but it becomes increasingly difficult to be
considered eligible.
So, by the end of this article, we hope we have
helped you with your common queries related to financial hardships and if you
can qualify for it.
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Created on Jan 14th 2021 18:56. Viewed 439 times.