Latest news with #ofFederalTaxLien
Miami Herald
2 days ago
- Business
- Miami Herald
The $10,000 IRS Rule Most Taxpayers Don't Know About - Clear Start Tax Explains What Happens When You Cross It
Clear Start Tax Warns That Hitting $10,000 in IRS Debt Can Trigger Serious Consequences - Including Passport Restrictions and Federal Liens IRVINE, CA / ACCESS Newswire / June 11, 2025 / If you owe the IRS less than $10,000, you might think you're in the clear. But Clear Start Tax says crossing that five-figure threshold can quietly trigger a cascade of government actions - including federal tax liens, denied passport renewals, and enhanced IRS collection efforts. Most taxpayers don't realize that $10,000 is a critical line in the sand for several IRS enforcement triggers. In 2025, enforcement is faster and more automated than ever, meaning debts that creep over this threshold can lead to serious consequences before the taxpayer even receives a phone call. "The number isn't arbitrary," says the Head of Client Solutions at Clear Start Tax. "Once your tax debt hits $10,000, multiple systems within the IRS and State Department can flag your account for escalating enforcement - and that includes federal lien filings and passport holds." What Happens at the $10,000 Mark According to Clear Start Tax, several federal programs and IRS enforcement protocols use $10,000 as a key trigger point: Federal Tax Liens: Once debt crosses $10,000, the IRS may begin filing a public Notice of Federal Tax Lien, which attaches to property, credit, and Revocation: Under the FAST Act, the IRS can certify seriously delinquent tax debt over $59,000 (adjusted annually) to the State Department - but debts over $10,000 often trigger early scrutiny that can affect renewals or Filing Requirement: U.S. persons with more than $10,000+ in foreign accounts at any point in the year must file an FBAR - Failure to do so can result in steep civil fines and even criminal Readiness: Debts over $10,000 often place taxpayers in line for wage garnishments or bank levies, especially if no resolution plan is in place. "Crossing the $10,000 mark can quietly activate IRS systems that move fast and leave little room to react," said the Head of Client Solutions at Clear Start Tax. "By the time a taxpayer realizes what's happening, they may already be dealing with a lien, frozen accounts, or even passport issues." What You Can Do Before It Hits Clear Start Tax emphasizes that the best strategy is to act before your balance reaches - or exceeds - the $10,000 threshold. Early intervention opens the door to more flexible IRS programs, such as: Installment Agreements: Monthly payments that prevent liens and enforcementOffer in Compromise: A negotiated settlement for less than you oweLien Withdrawal Requests: Preventing or reversing lien filingsCurrently Not Collectible (CNC): A temporary freeze on collections for qualifying hardship cases These options are often more accessible and more successful when applied proactively, before enforcement action has started. How Clear Start Tax Helps Clear Start Tax takes a preventive and personalized approach to tax debt relief, beginning with a full financial analysis to assess each client's risk of enforcement. Their team communicates directly with the IRS to quickly halt any escalating actions and then builds a customized resolution plan tailored to the client's income, assets, and financial hardship. 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: Contact Information Clear Start TaxCorporate Communications Departmentseo@ 535-1627 SOURCE: Clear Start Tax
Indianapolis Star
2 days ago
- Business
- Indianapolis Star
The $10,000 IRS Rule Most Taxpayers Don't Know About – Clear Start Tax Explains What Happens When You Cross It
Clear Start Tax Warns That Hitting $10,000 in IRS Debt Can Trigger Serious Consequences – Including Passport Restrictions and Federal Liens IRVINE, CA / ACCESS Newswire If you owe the IRS less than $10,000, you might think you're in the clear. But Clear Start Tax says crossing that five-figure threshold can quietly trigger a cascade of government actions – including federal tax liens, denied passport renewals, and enhanced IRS collection efforts. Most taxpayers don't realize that $10,000 is a critical line in the sand for several IRS enforcement triggers. In 2025, enforcement is faster and more automated than ever, meaning debts that creep over this threshold can lead to serious consequences before the taxpayer even receives a phone call. 'The number isn't arbitrary,' says the Head of Client Solutions at Clear Start Tax. 'Once your tax debt hits $10,000, multiple systems within the IRS and State Department can flag your account for escalating enforcement – and that includes federal lien filings and passport holds.' What Happens at the $10,000 Mark According to Clear Start Tax, several federal programs and IRS enforcement protocols use $10,000 as a key trigger point: Federal Tax Liens: Once debt crosses $10,000, the IRS may begin filing a public Notice of Federal Tax Lien, which attaches to property, credit, and assets. Passport Revocation: Under the FAST Act, the IRS can certify seriously delinquent tax debt over $59,000 (adjusted annually) to the State Department – but debts over $10,000 often trigger early scrutiny that can affect renewals or travel. FBAR Filing Requirement: U.S. persons with more than $10,000+ in foreign accounts at any point in the year must file an FBAR – Failure to do so can result in steep civil fines and even criminal charges. Levy Readiness: Debts over $10,000 often place taxpayers in line for wage garnishments or bank levies, especially if no resolution plan is in place. 'Crossing the $10,000 mark can quietly activate IRS systems that move fast and leave little room to react,' said the Head of Client Solutions at Clear Start Tax. 'By the time a taxpayer realizes what's happening, they may already be dealing with a lien, frozen accounts, or even passport issues.' What You Can Do Before It Hits Clear Start Tax emphasizes that the best strategy is to act before your balance reaches – or exceeds – the $10,000 threshold. Early intervention opens the door to more flexible IRS programs, such as: These options are often more accessible and more successful when applied proactively, before enforcement action has started. How Clear Start Tax Helps Clear Start Tax takes a preventive and personalized approach to tax debt relief, beginning with a full financial analysis to assess each client's risk of enforcement. Their team communicates directly with the IRS to quickly halt any escalating actions and then builds a customized resolution plan tailored to the client's income, assets, and financial hardship. 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: Contact Information Clear Start Tax Corporate Communications Department seo@ (949) 535-1627 SOURCE: Clear Start Tax View the original press release on ACCESS Newswire
Yahoo
08-03-2025
- Business
- Yahoo
I make $62K/year as a freelancer and haven't filed taxes in 5 years — can I fix this without going to jail?
I can assume you're laying awake at night wondering if you'll end up in jail for not paying your taxes — and if it's too late to fix it. I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) Home prices in America could fly through the roof in 2025 — here's the big reason why and how to take full advantage (with as little as $10) Americans with upside-down car loans owe more money than ever before — and drivers can't keep up. Here are 3 ways to cut your monthly costs ASAP One could argue that the stress of not paying your taxes (and the potential consequences) can be much more stressful than the chore of actually doing one's taxes. But you wouldn't be alone. Sixty-four percent of Americans say that tax season introduced a level of stress to their lives, per a NextDoor survey from 2024. Not filing your taxes can come with some serious consequences. For one thing, the Internal Revenue Service (IRS) will start charging penalties that accumulate over time. Penalties include both a 'failure to file' penalty (5% of your unpaid tax amount each month) and 'failure to pay' penalty (0.5%) — or a flat 5% for both penalties. Each penalty is up to a total of 25% of the tax due. On top of this, interest accumulates on whatever amount is withstanding starting from the tax deadline. As of the first quarter of 2025, the rate stands at 7%. Interest accrues on the entire amount, from the amount of taxes you owe, to penalties and unpaid interest. That starts to add up — and fast. As time passes, your tax debt will grow. If you don't file your taxes, the IRS could prepare your tax return for you, which is called a substitute for return (SFR). This isn't ideal, since it probably won't include any tax credits or deductions you're eligible for, which means you could end up paying more tax. With an SFR, you can either accept it or choose to refile your tax returns — along with any tax credits and deductions available to you. But, if you ignore it, the IRS could issue a notice of deficiency and start the debt collection process. The agency can garnish your wages and retirement accounts. It can take money from your bank accounts or even seize your property and sell it. Any future federal tax refunds or state income tax refunds that you're due may also be seized and applied to your federal tax liability. The IRS may file a Notice of Federal Tax Lien, which would be a part of public records and affect your ability to get credit. These are not the only consequences of not filing. If you don't report self-employment income, you won't receive credits toward Social Security retirement. It also means you may not be able to get a loan, since you won't have a tax return to prove your income level. You would face criminal prosecution, with the possibility of fines and jail time, if you're believed to have intentionally committed tax evasion or tax fraud, but this is very unlikely. Read more: Jamie Dimon issues a warning about the US stock market — says prices are 'kind of inflated.' Crashproof your portfolio with these 3 rock-solid strategies In 2023, 64 million Americans performed freelance work, which is 38% of the U.S. workforce, according to an Upwork study. Freelancers are considered sole proprietors or gig workers, and need to report any income and losses via Schedule C (Form 1040). A traditional employee gets a single W-2 form to file their taxes, which makes filing taxes relatively straightforward. But a freelancer who works with multiple clients on multiple projects will end up with numerous 1099 forms and possible 1099-K forms (if they receive payments through online services such as PayPal or Venmo). You can start to fix your tax situation by gathering all your documents, including the last return you filed, any letters or notices from the IRS and any tax documents you've received. You'll also want to document your income and business expenses. It's best to be proactive. If you contact the IRS, you may be able to work out a payment plan, but you will need to file all your required returns first. You may also request the IRS to delay the collection process. If your financial situation is extremely bad and you're eligible, you can apply for an offer in compromise to pay less than you owe. You may also consider applying for a personal loan to pay your tax debt if it makes financial sense for you. Since you're dealing with five years of back taxes, you may want to consider the help of a tax professional who specializes in working with self-employed workers. An enrolled tax agent may cost a bit of money upfront, but could help to resolve back taxes and negotiate a solution with the IRS. Once you have filed your back taxes and perhaps worked out a payment plan with the IRS, you'll want to make every effort to stay compliant going forward. Self-employed workers pay federal and possibly state income taxes, as well as a 15.3% self-employment tax, which covers Social Security and Medicare. But self-employed workers can also claim business-related deductions, including phone and Internet service, computer equipment, office expenses and business-related travel. Freelancers who work from home may also be eligible for the home office deduction. Once you have sorted out your income sources, expenses, deductions and credits from the past five years, you can create a document or spreadsheet — or use a software program — to keep track of those categories going forward. For example, you can create a document to track your clients, assignments and income for the year. An accounting software program could be a worthwhile investment to make this process easier. While freelancers file annually like everyone else, they're also required to make quarterly payments throughout the tax year. By keeping detailed records of her income and expenses — and by setting money aside for tax payments — you will be better prepared come tax time. This could also help you estimate how much you'll owe in the upcoming tax season, which could significantly reduce your stress. If you want to further reduce your stress — or don't want the hassle of crunching the numbers — you could also work with a bookkeeper or use accounting software to help manage your finances. One dozen eggs in America now costs a record high of $4.95 — here are 3 simple ways to inflation-proof your retirement portfolio Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead Protect your retirement savings with these 5 essential money moves — most of which you can complete in just minutes This article provides information only and should not be construed as advice. It is provided without warranty of any kind. Sign in to access your portfolio
CBS News
04-03-2025
- Business
- CBS News
What happens if you owe the IRS more than $25,000?
The realization that you owe the Internal Revenue Service (IRS) a substantial amount of money can feel like a major crisis. A tax debt exceeding $25,000 isn't just a bill, after all — it's a financial situation that demands immediate attention. For many taxpayers, though, this type of tax debt accumulates slowly — perhaps through underpayment over several years, a major financial windfall that wasn't properly accounted for or a business venture that didn't set aside enough for taxes. So, while this type of tax bill is a big issue, it can also sneak up on you if you aren't careful. Whatever the cause, though, once your tax debt crosses the $25,000 threshold, the IRS implements specific procedures and may take more aggressive collection actions than they would for smaller amounts. But the good news is that there are strategies you can use to deal with the issue, even if you're facing this type of substantial tax debt. After all, while the IRS is certainly interested in collecting what's owed, the agency also recognizes that being inflexible with taxpayers isn't in anyone's best interest. But what exactly happens if you owe the IRS more than $25,000 — and what options do you have for resolving this type of tax debt? Find out how to get help with your IRS tax debt. What happens if you owe the IRS more than $25,000? When your tax debt exceeds $25,000, the IRS tends to bring out more serious collection tools. To start, you'll typically receive a series of notices, culminating in a Final Notice of Intent to Levy that gives you 30 days to respond before the IRS can begin seizing assets. The $25,000 threshold is significant because it affects your payment plan options. For debts below this amount, you can typically set up a streamlined installment agreement online with minimal documentation. For debts above $25,000, though, the process becomes more complex, and you'll need to complete detailed financial statements that disclose your income, expenses, assets and liabilities. The IRS may also file a Notice of Federal Tax Lien if your unpaid assessment exceeds $10,000 — so a $25,000 tax debt would likely result in this action taking place. This public document alerts creditors that the government has a legal claim against your property, including property acquired after the lien is filed. As a result, a tax lien can severely damage your credit score and make it difficult to sell assets or obtain new credit. For debts exceeding $25,000, the IRS may also: Garnish your wages, leaving you with only a small portion deemed necessary for basic living expenses Seize bank accounts without going to court Take valuable assets like cars, real estate and business equipment Revoke or deny passport renewal if your tax debt exceeds $50,000 Assign your case to a revenue officer who will investigate your financial situation in person Speak to a tax relief specialist about your options now. How to get rid of large tax debts you can't pay If you have a large tax debt with the IRS and don't have the means to pay it off in full, these options may be worth considering: Set up an IRS payment plan The IRS offers payment plans (or installment agreements) that allow you to pay your tax debt over time. If you owe more than $25,000, you may need to provide financial information to qualify. The most common options include: Short-term payment plans: If you can pay the debt within 180 days, this is the simplest option. Long-term installment agreements: This allows you to make monthly payments over several years, but you may be required to set up direct debit if your debt exceeds $25,000. Apply for an Offer in Compromise An Offer in Compromise (OIC) allows you to settle your tax debt for less than what you owe, but it's not easy to qualify. The IRS will review your financial situation to determine if accepting a lower amount is in the agency's best interest. If approved, you'll be able to pay off your tax debt for a fraction of the original amount. Request "Currently Not Collectible" status If you're experiencing extreme financial hardship, you can request that the IRS temporarily stop collection efforts. This doesn't erase your debt, but it can give you breathing room while you get back on your feet. Interest will continue to accrue during this time, however. Work with a tax relief company If dealing with the IRS feels overwhelming, tax relief companies specialize in negotiating on your behalf. These experts can help set up payment plans, file for an Offer in Compromise and protect you from aggressive collection actions. The bottom line A tax debt exceeding $25,000 is a serious issue, but there are still options to consider in these cases. For some, an installment agreement makes sense. Others may benefit from pursuing an Offer in Compromise or temporarily halting collections through Currently Not Collectible status. Whatever path you choose, though, consider consulting with a tax professional who can guide you through the process. While there may be costs involved, professional assistance often pays for itself by securing more favorable terms, preventing collection actions and providing peace of mind during a stressful time.
CBS News
29-01-2025
- Business
- CBS News
What happens if you owe the IRS but can't pay?
When tax season rolls around, most people either look forward to a refund or brace for the payment they owe. For an increasing number of Americans, though, paying their tax bill is simply not an option. As of early 2024, hundreds of billions of dollars in back taxes were owed to the Internal Revenue Service (IRS), and with the shifts to the economic landscape — and the uptick in financial challenges Americans are facing — it's likely that even more people will find themselves in a position where they owe the IRS but lack the resources to pay. For those who owe the IRS but can't pay, the situation can feel overwhelming, especially considering how much power the IRS has in terms of collecting what's owed. And having unanswered questions about the penalties, interest charges and potential legal actions you may face in this situation only adds to the stress. So, it's important to clear some of those questions up if you've found yourself in a position where you owe the IRS money but don't have the funds on hand to cover it. So what exactly will happen if you owe tax money to the IRS but can't pay? Below, we'll explain what happens if you find yourself in this position, as well as the options you have available to address your tax debt and practical steps you can take to resolve the issue. Speak to a tax relief expert about your options today. What happens if you owe the IRS but can't pay? Owing money to the IRS is a serious matter, but it's not as dire as some might fear — at least not immediately, anyway. When you file your tax return and owe more than you can pay, the IRS will send you a bill for the outstanding balance. This bill outlines the amount due, including any penalties and interest accrued from the date your taxes were due. If you don't pay your balance or make arrangements with the IRS, penalties and interest will continue to accrue. The penalty for failure to pay is 0.5% of the unpaid taxes for 2025, which is charged for each month or part of a month that the tax bill remains unpaid, according to the IRS. That penalty won't exceed 25% of your unpaid taxes, but over time, these added costs can significantly increase your total debt. If several months go by without payment or contact, the IRS may escalate its collection efforts. This can include filing a federal tax lien, which publicly claims your property as collateral for the debt or issuing a levy, which allows the IRS to seize assets like bank accounts, wages or even Social Security benefits. This can also include filing a Notice of Federal Tax Lien, which becomes public record and impacts your credit score. In extreme cases, non-payment can lead to legal action or criminal charges. However, these types of penalties are rare and are typically reserved for cases involving tax evasion or fraud. Find out how the right tax relief program could benefit you now. How to get rid of unpaid IRS tax debt Several options exist for managing tax debt, each with distinct advantages: Payment plans: An installment agreement with the IRS allows you to pay off your debt in monthly increments. The IRS offers both short-term plans (up to 180 days) and long-term plans (up to six years). While interest and penalties still accrue during that time, spreading payments out over time can make the debt more manageable. An Offer in Compromise (OIC): If paying in full would cause financial hardship, you may be eligible for an OIC, which allows you to settle your tax debt for less than the full amount owed. The IRS evaluates OIC applications based on your income, expenses, assets and ability to pay. Currently Not Collectible (CNC) status: CNC status temporarily halts collection activities if paying your tax debt would create economic hardship. While interest continues to accrue, this status provides breathing room to improve your financial situation. Tax relief services: Private tax relief companies specialize in negotiating with the IRS on your behalf. These services can help you understand your options, file the necessary paperwork and advocate for a favorable resolution, whether that's settling your tax debt or something else entirely. The bottom line Owing money to the IRS can feel like an insurmountable challenge, but it's important to remember that you have options. Whether it's setting up a payment plan, working with a tax relief service on solutions, negotiating a reduced settlement or seeking another type of temporary relief, there are options to assist taxpayers in difficult financial situations. Taking action as soon as possible is crucial, though, if you want to minimize penalties and interest while avoiding severe collection measures.
