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|11-02-2009, 07:42 AM||#1|
Join Date: Nov 2009
Tax Relief - What It Is ?
Any reduction of taxes is a good thing no matter how you see it. This is because the taxes you pay are taken out of your disposable income.
Tax relief is the reduction, deferment or elimination of taxes which a taxpayer is granted by the state or federal government under certain circumstances; or, for expenses incurred by the taxpayer. For instance, the interest which is charged on educational loans may be deducted from the total tax payable in some cases. A tax deferment due to disasters or calamities, such as those granted in 2005 to the victims of Hurricane Katrina, can also be granted. Exemptions may also be granted to low- or middle-income families, which translate to a reduction of some amount from the total taxable amount, thereby reducing the tax.
Tax relief is a definite benefit to taxpayers, and especially those facing financial constraints or whose business is in debt. The IRS introduced a tax relief program in 1992, which reduced the back taxes of qualified individuals and businesses. This sort of tax amnesty is known as an offer in compromise and involves the reduction of certain portions of back taxes. The government and the taxpayer settle on a compromise amount to be paid.
The process of granting tax relief normally involves the tax authorities reviewing the taxpayer's capacity to pay his tax, while taking into account his income and properties. Should the value of certain taxable assets be substantially reduced, a tax relief may be granted on those assets, usually in the form of reduced asset value. The corresponding tax is similarly reduced.
As a general rule, tax relief is only granted if the reason for the request is valid under tax laws.
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