Latest news with #FreshStart
CNBC
18 hours ago
- Business
- CNBC
Millions of student loan borrowers may be headed for default: Here's who's most at risk—and how to avoid it
Student loan payments can cost borrowers hundreds of dollars each month. But falling behind on those payments may wind up being even costlier. Advocacy organizations and student loan experts have warned of a coming "default cliff" for millions of borrowers who are already behind on payments. The last of the pandemic-era safeguards expired earlier this year, and President Donald Trump's administration has made it clear it is intent on collecting outstanding loans. "We are committed to ensuring that borrowers are paying back their loans, that they are fully supported in doing so," Education Secretary Linda McMahon wrote in The Wall Street Journal in April. Federal student loans enter default when a borrower goes 270 days without payment. The potential wave of defaults is the culmination of a number of circumstances. Borrowers weren't required to make payments from March 2020 until September 2023, but loan servicers were instructed not to report delinquency — missed payments — to credit bureaus until September 2024. That delinquency reporting resumed at the beginning of 2025. Now, borrowers who continue to miss payments risk having their tax refunds withheld and wages garnished. Around 8 million borrowers had loans in default in March 2020, according to Federal Student Aid data. That figure dropped to 5.3 million by March 2025, largely due to Fresh Start, a Biden-era program that allowed defaulted borrowers to have their loans brought back into good standing between April 2022 and October 2024. As of the second quarter of 2025, roughly 10% of student debt was at least 90 days past due, according to Federal Reserve data. Around 13% of loans entered "serious delinquency," or exceeded 90 days past due, in the second quarter. Black and other minority borrowers, those who did not complete a degree or credential, older borrowers, low-income borrowers and other groups are among those most likely to default. Here is the share of borrowers at least 90 days past due on their loans in each state, as of the first quarter of 2025, according to the most recent Federal Reserve data: If you're unsure about the status of your loans, log into your account to see if they're headed toward default or already there. When you default on your student loans, the entire balance comes due immediately, a process known as acceleration. You can get out of default by paying off that balance, but that is not likely a viable option for most borrowers. If you take no action once your loans are in default, you risk having your Social Security payments and tax refunds withheld or your wages garnished. "This can importantly include refundable tax credits, including those that are meant to protect against child poverty, such as the child tax credit and the earned income tax credit," Abby Shafroth, managing director of advocacy at the National Consumer Law Center said in a recent media briefing. You will be barred from accessing any additional federal student aid and your credit score — which would likely already be damaged from the missed payments — can take another hit. "Borrowers who struggle to afford their payments [who wind up] in default can then sort of paradoxically be compelled to repay more each year, and more in total over the life of the loan, than if they'd not fallen into default," Shafroth says. The combination of acceleration, wage garnishment and Treasury offset could have a borrower paying more in the short-term and in total than they would have on an income-driven repayment plan, Shafroth says. Borrowers may also face collection fees and interest capitalization which is when the interest owed gets added to the principal balance. They also lose access to income-driven repayment plans and any loan forgiveness they may have otherwise qualified for. To get out of default, you'll need to either pay off the balance or enter loan rehabilitation. In loan rehabilitation, you'll negotiate a payment plan with your servicer and be required to make nine consecutive, on-time payments. Your monthly payment can be as low as $5 during this period, depending on your income, according to Federal Student Aid. However, your wages may still be garnished and won't count toward your payment progress during rehabilitation. Once your loans are rehabilitated, they are considered in good standing and you may once again apply for income-driven repayment plans. If you're struggling to make your student loan payment, try to contact your loan servicer as soon as possible to see what your options are. The first line of defense for many borrowers is enrolling in an income-driven repayment plan. Your payment can be as low as $0 a month depending on your income when you enroll. However, if you have explored those options, you should consider applying for a deferment or forbearance, Shafroth says. Deferment and forbearance both pause mandatory payments for borrowers in certain financial situations like unemployment or major medical treatments. Borrowers need to apply through their loan servicer and demonstrate their financial need in order to be granted either option and interest may continue accruing if your request is approved. "Those temporarily pause payments, they're not a long-term solution, but they're a good temporary solution," she says.
Miami Herald
01-08-2025
- Automotive
- Miami Herald
Clear Start Tax Warns 1099 Truckers: Unpaid Taxes Could Lead to License Suspensions and Seized Refunds
With IRS enforcement on the rise, self-employed truck drivers face growing financial and legal risks from unfiled returns and unpaid tax debt. IRVINE, CALIFORNIA / ACCESS Newswire / August 1, 2025 / As IRS collections intensify in 2025, a growing number of self-employed truck drivers are facing serious consequences for falling behind on their taxes - including the suspension of commercial licenses and the seizure of federal tax refunds, according to a new warning from Clear Start Tax, a nationwide tax resolution firm. The warning comes amid increased scrutiny of 1099 workers and rising reports of enforcement actions that are disproportionately impacting independent contractors in industries like trucking, where many drivers are responsible for handling their own tax filings and payments. "Most 1099 truckers aren't trying to avoid taxes - they're just overwhelmed by inconsistent income, complicated deductions, and rising operating costs," said a spokesperson from Clear Start Tax. "Unfortunately, the IRS doesn't distinguish between intentional evasion and simple disorganization." Clear Start Tax notes that truckers with unpaid taxes or unfiled returns may see their CDL flagged during background checks or compliance reviews, which can jeopardize their livelihood. In some states, drivers have reported license holds or suspensions tied to unresolved tax issues. "We're seeing more cases where tax debt causes ripple effects: seized refunds, rejected loan applications, even blocked license renewals," the spokesperson added. "For truckers who rely on every mile to make a living, these disruptions can be devastating." To avoid penalties, garnishments, and potential enforcement actions, Clear Start Tax urges 1099 truckers to act early - by filing any missing returns, reviewing estimated tax payments, and exploring relief programs like the IRS Fresh Start initiative. "There are options to settle what you owe - often for less than the full amount - but waiting only limits what can be done," said the spokesperson. "Truckers shouldn't wait until the IRS pulls them off the road." About Clear Start TaxClear Start Tax is a nationwide tax resolution company that helps individuals and small businesses resolve IRS and state tax debt through proven strategies and personalized support. From unfiled returns to wage garnishments, the team specializes in helping taxpayers regain control of their finances with compassion and clarity. Need Help With Back Taxes? Click the link below: 710-3533 Contact InformationClear Start TaxCorporate Communications Departmenttech@ 800-4011 SOURCE: Clear Start Tax
USA Today
14-07-2025
- Business
- USA Today
Job Loss Can Trigger IRS Debt - Clear Start Tax Explains How Unemployment, 401(k) Withdrawals, and Gig Work Increase Your Tax Liability
Clear Start Tax breaks down the hidden tax risks of sudden income changes – and how to recover before penalties build up. In a time of ongoing layoffs, side gigs, and economic uncertainty, many Americans are finding themselves hit with unexpected tax bills, often months after their financial crisis. According to Clear Start Tax, job loss doesn't just strain household income – it can create IRS debt from unreported unemployment income, early 401(k) withdrawals, and untracked freelance or gig earnings. 'People are shocked when they owe the IRS after a year of financial hardship,' said the Head of Client Solutions at Clear Start Tax. 'But job loss often leads to survival-based choices that trigger tax issues down the line. We help people correct those filings and get back on track.' How Job Loss Can Lead to IRS Debt Many Americans assume that because they weren't working full-time, they won't owe much – or anything – in taxes. But the reality is that many forms of income during unemployment are taxable, and without proper withholding or planning, a bill can build up quickly. Clear Start Tax identifies the most common sources of unexpected IRS debt after job loss: Unemployment Benefits – These are fully taxable at the federal level, yet often under-withheld. 401(k) or IRA Withdrawals – Early withdrawals (before age 59½) typically carry a 10% penalty plus regular income tax. Freelance, Gig, or Contract Work – Without employer withholding, taxpayers are responsible for their own income and self-employment taxes. Missed Quarterly Payments – Independent workers or those with side gigs must estimate and pay taxes every quarter, or face penalties. 'In tough times, people do what they must to stay afloat – whether that's taking from retirement or picking up gig work,' said the Head of Client Solutions at Clear Start Tax. 'But without the right tax planning, those decisions can come back as unexpected IRS debt.' IRS Notices Are Increasing – Take Action Before It's Too Late When taxes go unpaid or underreported, the IRS often responds with letters like CP14 (balance due), CP2000 (underreported income), or Intent to Levy notices. These letters can look intimidating, but they're also an opportunity to fix the issue before it escalates. According to the IRS, more than 10 million taxpayers received CP14 notices in 2024 alone, many tied to misreported unemployment and self-employment income. Tax experts at Clear Start Tax recommend: Reviewing all income sources – including unemployment, withdrawals, and side gigs Gathering records from payment apps, gig platforms, and retirement account statements Amending prior-year returns if income was missed or misclassified Responding promptly to IRS notices, especially if you can't pay the full amount Exploring relief options to reduce penalties or negotiate a settlement The IRS Fresh Start Program Can Offer a Path Forward Taxpayers who are struggling financially may qualify for IRS Fresh Start relief, which can help reduce or settle their tax debt. Clear Start Tax works with clients to evaluate eligibility and build a customized case based on income, expenses, and current hardship. The program is designed to help taxpayers in hardship situations. Depending on eligibility, it may provide: Payment plans based on current ability to pay Reduction or removal of penalties and interest Settlement for less than the full amount owed through an Offer in Compromise By answering a few simple questions , taxpayers can find out if they're eligible for the IRS Fresh Start Program and take the first step toward resolving their tax debt. Don't Let a Difficult Year Turn Into Long-Term IRS Trouble Clear Start Tax emphasizes that it's never too late to take action. Whether the debt came from job loss, side income, or early retirement withdrawals, there are programs available to help people rebuild financially and avoid further IRS consequences. 'We've helped people who thought they were ruined financially after losing a job or draining a retirement account,' said the Head of Client Solutions. 'With the right plan, it's possible to reduce what you owe and rebuild financially.' About Clear Start Tax Clear Start Tax is a full-service tax liability resolution firm that serves taxpayers throughout the United States. The company specializes in assisting individuals and businesses with a wide range of IRS and state tax issues, including back taxes, wage garnishment relief, IRS appeals, and offers in compromise. Clear Start Tax helps taxpayers apply for the IRS Fresh Start Program, providing expert guidance in tax resolution. Fully accredited and A+ rated by the Better Business Bureau, the firm's unique approach and commitment to long-term client success distinguish it as a leader in the tax resolution industry. Need Help With Back Taxes? Click the link below: (888) 710-3533 Contact Information Clear Start Tax Corporate Communications Department seo@ (949) 535-1627 SOURCE: Clear Start Tax View the original press release on ACCESS Newswire
NBC News
12-07-2025
- Health
- NBC News
Recovery home residents face impact of federal funding cuts
Fresh Start, a recovery program based out of Tennessee, is facing the impacts of state and federal budget cuts. NBC News' Kate Snow visits one of the recovery homes and talks to the women whose lives are being impacted.
Indianapolis Star
11-07-2025
- Business
- Indianapolis Star
Filing Separately Could Cost You More on Back Taxes - Clear Start Tax Explains Smarter Options for Married Couples
Clear Start Tax shows married couples how to avoid costly filing mistakes and save more when back taxes are involved. IRVINE, CA / ACCESS Newswire / July 11, 2025 / Married taxpayers dealing with back taxes are often surprised to learn that filing separately to 'protect' one spouse from IRS collections can actually lead to higher tax bills, lost credits, and fewer resolution options. According to Clear Start Tax, understanding the pros and cons of married filing jointly vs. separately is critical for couples hoping to resolve tax debt while preserving as much income as possible. 'Filing separately might feel safer when one spouse has IRS issues – but it usually ends up being more expensive,' said the Head of Client Solutions at Clear Start Tax. 'In many cases, joint filing opens the door to relief programs, better deductions, and faster resolution.' Why Filing Separately Can Backfire for Couples With Tax Debt Some couples assume that filing separately shields one spouse's income or refunds from being seized. While separate filing may delay IRS collection on a refund, it doesn't always protect shared income or assets, especially in community property states. And in many cases, filing separately ultimately results in: Higher overall tax liability Loss of key deductions and credits (like the Earned Income Credit or Child Tax Credit) Reduced access to Fresh Start benefits or less favorable Offer in Compromise terms Longer resolution timelines and more paperwork How Filing Together Could Be the Smartest Move for Tax Relief Even when one spouse owes back taxes, joint filing can result in lower taxes and greater access to IRS relief programs. Clear Start Tax helps couples explore the advantages of working together, not separately. For situations where only one spouse is responsible for the debt, programs like Innocent Spouse Relief or Injured Spouse Allocation may protect the non-liable spouse, without sacrificing the benefits of joint filing. 'The IRS gives couples a way to protect the innocent spouse while still getting the best outcome,' said the Head of Client Solutions. 'We help clients understand their rights and design a strategy that keeps more money in their household.' The Fresh Start Program Can Help Couples Settle Tax Debt Together This IRS initiative allows struggling taxpayers – including married couples – to settle or restructure their tax debt based on what they can reasonably afford. Clear Start Tax walks couples through every step of the process. Settlements for less than the full amount owed Reduced penalties and halted interest Affordable payment plans based on household income By answering a few simple questions, taxpayers can find out if they're eligible for the IRS Fresh Start Program and take the first step toward resolving their tax debt. Joint Returns Come With Risk – But Also With Options While joint returns mean both spouses are legally responsible for the full tax bill, Clear Start Tax helps clients explore: Partial-pay agreements Spousal relief requests Asset protection strategies Custom IRS settlement negotiations These strategies can balance legal responsibility while still maximizing the couple's chances of saving money and moving forward. About Clear Start Tax Clear Start Tax is a full-service tax liability resolution firm that serves taxpayers throughout the United States. The company specializes in assisting individuals and businesses with a wide range of IRS and state tax issues, including back taxes, wage garnishment relief, IRS appeals, and offers in compromise. Clear Start Tax helps taxpayers apply for the IRS Fresh Start Program, providing expert guidance in tax resolution. Fully accredited and A+ rated by the Better Business Bureau, the firm's unique approach and commitment to long-term client success distinguish it as a leader in the tax resolution industry. Need Help With Back Taxes? Click the link below: (888) 710-3533 Contact Information Clear Start Tax Corporate Communications Department seo@ (949) 535-1627 SOURCE: Clear Start Tax View the original press release on ACCESS Newswire
