More taxpayers than ever before are struggling to pay their taxes.  In response to this concern, the IRS is providing tax help to individuals and small businesses that are having difficulties meeting their tax obligations.

Back in February, the Internal Revenue Service announced a tax help initiative for taxpayers to get a fresh start with their tax liabilities. This tax help plan centers on changes to the collection practices that will lessen the impact on taxpayers.

Tax help for taxpayers will come in the form of changes to the IRS Lien Policies that will: significantly increase the dollar threshold when liens are generally issued, resulting in fewer tax liens, making it easier for taxpayers to obtain lien withdrawals after paying a tax bill, and withdrawing liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement.

Taxpayers struggling to meet their tax obligations will benefit from the IRS policy changes.

Do you owe taxes but don’t have the money? Are you afraid of the tax trouble it will cause? Not sure what to do about this tax problem? Before you panic and worry yourself to death, know there are options available to address this tax situation. Be forewarned, not choosing an option and avoiding the tax issue could result in the IRS filing a Federal Tax Lein against you.

Here are 10 tax tips from the IRS for taxpayers who can’t pay taxes in full:

1. The IRS strongly encourage taxpayers to pay as much of the tax as possible. This will minimize the tax liabilities because the amount of interest and penalties owed will be less.
2. Each taxpayer’s situation is different, but some may qualify for a tax extension, a temporary delay, a payment (installment) agreement or an Offer in Compromise to satisfy the tax debt.
3. Taxpayers who need more time to pay the full amount should contact the IRS immediately about the tax problem using the phone number or mailing address printed on your tax bill.
4. A good tax tip is to consider getting a loan from a bank or finance company. The interest and fees will be lower than the interest and tax penalties imposed by the Internal Revenue Service.
5. Taxpayers who can’t pay the full amount of the tax could qualify for additional time, up to 120 days, to pay the tax debt in full. The advantage of this tax payment arrangement is that there is no fee and minimizes the interest and tax penalties.
6. Taxpayers who can’t afford to pay their taxes within 120 days should consider an installment agreement. There is a one-time fee of $105, an additional fee of $53 for direct deposit.
7. To apply for an installment agreement you can use the Online Payment Agreement application available on the IRS website; file a Form 9465, Installment Agreement Request; or call the IRS at the telephone number shown on your bill.
8. Even if you set up an installment agreement, the IRS may still file a Notice of Federal Tax Lein to secure the government’s interest until you make the final payment.
9. Taxpayers with serious financial hardships and limited income may be able to settle their tax liabilities for less than the full amount owed through an Offer in Compromise with the IRS. But be aware, if the IRS believes you could settle your tax debt in a lump sum or with payments, chances are you won’t qualify.
10. The top tax tip for taxpayers who can’t pay the full amount of taxes is to always respond to an IRS notice. If you disregard or fail to respond to the IRS notice, and do not make payments arrangements to pay your tax liabilities, the IRS is entitled to take collection action.

Taxpayers who can’t pay their taxes in full should heed the tax tips outlined above. The worst action a taxpayer could make is to avoid the issue altogether. Even though it’s a hard thing to do, call the IRS and arrange a tax payment arrangement to pay off your tax liabilities.

More information on the collection process is available at http://www.irs.gov.

Source: irs.gov

Before you know it, federal income tax season will be here. If you were one of the millions of unfortunate Americans who lost their job in 2009, be aware it may have created new tax issues.

The Federal Stimulus Act has extended the tax benefit for those who received unemployment compensation in 2009. The first $2,400 of 2009 Unemployment Compensation is TAX-FREE. However, the unemployment benefits above the $2,400 limit will still count as taxable income.

Otther income tax issues created by unemployment have to do with severance and other payments. Severage payments from your former employer are taxable. In addition, any payments you received for accumulated vacation or sick time is also taxable. Always ensure that enough taxes are withheld from these payments to avoid a big tax bill.

Generally, withdrawals from pension plans are taxable unless they are transferred to a qualified plan (like an IRA). If you happen be under 59 1/2, an additional tax may apply to the taxable portion on your federal income tax.

If you sell stocks, bonds and investment property are not immediately taxable. However the sale of assets should be reported. If you have a gain on a sale, it may generate an income tax liability. You should review your overall tax situation and make sure you pay the required taxes to avoid any estimated tax penalty. Be aware that it may effect your federal income tax and state income tax (if applicable).

There are some deductions you can take when filing your federal income tax forms. You can deduct employment and outplacement agency fees, resume preparation, and travel expenses for job search and interviews.

If you lost your job, be advised that moving costs incurred because of a job change may be deductible. You must meet certain criteria relating to distance moved and timing of the move.

If you decide to start your own business after becoming unemployed, be aware that the IRS provides information and classes.

If you become eligible for Public Assistance or Food Stamps it is not taxable.

Your former employer must provide your W-2 by January 1, 2010, even if the business filed bankruptcy. If you haven’t received your W2 by the required time, contact your former employer. If that fails, the IRS can assist you in filing a substitute W-2.

If you lost your job in 2009, we suggest you contact IRS (www.irs.gov), your accountant or a tax attorney to maximize your tax deductions and reduce your tax liabilities.