A tax debt can have far-reaching consequences in a variety of ways. That is why it is important to do all you can to pay outstanding taxes as soon as possible. One of the ways tax debt can negatively impact taxpayers is by interfering with unemployment tax refunds. According to the IRS, Unemployment Tax Refunds are subject to normal offset rules, which means they can be seized on account of unpaid federal tax, state income tax, state unemployment compensation debts, child support, spousal support or student loans. Tax attorneys can help taxpayers seek IRS debt relief on favorable terms that don’t bring wholesale disruption to their finances.
The Biden Waiver
President Joseph. R. Biden’s March America Rescue Plan has, among its provisions, the waiver of federal income taxes on up to $10,200 in 2020 unemployment insurance benefits for individuals who earn less than $150,000 a year. Due to the fact that most people had filed before March 11, the day on which the bill was signed into law, a lot of them became entitled to refunds of the amounts by which they had overpaid.
Related Blog: How to Approach the IRS Office Of Appeals
While the IRS has promised automatic refunds, meaning taxpayers do not have to file again, those with back taxes have little reason to smile. This is because, as mentioned earlier, the federal government and most states regard unemployment benefits, including any extra money distributed by way of federal aid programs, to be taxable income. This leaves unemployment tax refunds exposed to garnishments. The fact that taxes are not automatically deducted from unemployment aid has seen the potential for refund shock rising exponentially for the 2020 tax year in light of the America Rescue Plan.
Related Blog: Debunking 5 Myths Related to IRS Tax Audits
Taxpayers must take action to pay back taxes before the IRS initiates harsh recovery procedures. You can get IRS debt relief through facilities such as IRS debt forgiveness, IRS penalty abatement, offer in compromise, and IRS tax installment agreement. Dallas tax attorneys at the Law Offices of Nick Nemeth can help you get a favorable resolution when looking to get IRS debt help. To get answers to all your questions about IRS debt relief or to discuss your situation, call (972) 627-4580 or email firstname.lastname@example.org.