The IRS just released a new unemployed tax relief program if you can’t afford to pay your taxes this spring. The tax relief is part of the Fresh Start program. Here is a summary of the unemployed tax relief program from the IRS:
Who Qualifies for the Tax Relief?
The unemployed tax relief is for the following taxpayers:
- Wage earners who were unemployed at least 30 consecutive days during 2011 or in 2012 up to the April 17 tax deadline [1].
- Self-employed individuals who experienced a 25 percent or greater reduction in business income in 2011 due to the economy.
What is the Tax Relief?
The tax relief is a 6 month grace period on failure-to-pay penalties [2] for tax year 2011. You will not have to pay the failure to pay penalty if the tax, interest and any other penalties are paid in full by Oct. 15, 2012. While the penalty is waived, you will still need to pay your taxes and interest. To qualify your 2011 balance due on your taxes cannot exceed $50,000.
Income Limits
The tax relief is for taxpayers who are under the following income limits based on filing status [3]:
- Married filing joint: $200,000
- Single: $100,000
- Head of household: $100,000
How to Claim the Tax Relief
To get the unemployed penalty relief, fill out Form 1127A [4]. You should still file your tax return by the tax deadline [1]. For more information see the IRS news release: unemployed tax relief [5].