As Americans Drop Below Poverty Line, Tax Problems Rise Up
According to U.S. Census figures, the nation’s poverty rate in 2010 reached 15 percent, the highest level in 17 years. More than 46 million Americans are now considered to be living below the poverty line which comes out to 2.6 million more than in 2009, when the poverty level was 14.3 percent (and the largest number in the 52 years the Census Bureau has been tracking it!!) Those living in poverty include one in five children under the age of 18, a category whose poverty rate rose to 22 percent in 2010, and adults 18 to 64 at 13.7 percent.
The poverty line is defined as income of $22,314 a year for a family of four and $11,139 for an individual. The relevant data used to calculate poverty status includes most sources of cash, including wage earnings, Social Security, pensions, interest and dividends, and benefits such as workman’s compensation, veteran’s benefits, and unemployment insurance, but excluding capital gains. The downward trend is most pronounced for those already at the lower rungs of the income ladder. CNN Money reports that the bottom 60 percent of households saw their income fall last year, while households making $100,000 or more enjoyed a rise in income. Median income dropped 2 percent, to $49,445, in 2010.
Scarcity of jobs is the leading factor in the decline. The unemployment rate currently runs around 9 percent nationally, but some experts believe the jobless rate will climb higher before any significant reduction takes place.
With more Americans below the poverty line, irs tax problems rise above normal trends too. Those already behind in tax payments will find it more difficult to resolve their debt, while others who always paid taxes on time may find it difficult, or impossible, to do so. Still others may be confused about whether they need to file taxes at all.
IRS Publication 501 details who is required to file a tax return and includes a chart of the tax filing thresholds for different age groups and filing statuses. For those already owing back taxes or other tax debt, as well as those who are figuring they may end up in delinquency, there could be ways to avoid or minimize tax penalties. Filing a return is critical, and even a $10 check toward taxes owed will show good faith.
A Certified Tax Resolution Specialist or other experienced tax attorney can provide guidance on the IRS programs to help taxpayers remain compliant, among them Installment Agreements of scheduled payments and Offers in Compromise that reduce the tax debt owed. A qualified taxpayer may even be deemed “temporarily uncollectible,” in which case the IRS forgoes collection as long as the taxpayer files a return and remains in compliance going forward. A tax resolution professional will also be able to calculate correctly the amount of tax actually due to the IRS. These avenues can help a taxpayer avoid delinquency or tax debt even in the worst of economic times.
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Tags: certified tax resolution specialist, IRS tax problems, Offer in Compromise, Offer in Compromise program, tax attorney, tax problem professional, tax resolution
