Can an Offer in Compromise Help with My Tax Debt?
February 3, 2025
If you’re struggling to pay off tax debt, you're not alone. Thankfully, an Offer in Compromise (OIC) may be the solution you need. This tax resolution option allows taxpayers to settle their tax liabilities for less than the full amount owed, providing a solution for those facing significant financial challenges.
This article will guide you through what an Offer in Compromise is, the eligibility criteria, and how it can help resolve your tax issues. Learn more about whether this tax resolution option is right for you.
What is an Offer in Compromise?
An Offer in Compromise is a tax resolution strategy that can help you settle your IRS debt for less than what you owe. If you find yourself overwhelmed by tax obligations and struggling to make payments, an OIC could be the relief you need.
The IRS might agree to accept a lower amount if you demonstrate that paying the full balance would cause financial hardship, or if there are valid doubts about the accuracy of your tax liability. This tax resolution tool allows you to move forward and regain control of your financial situation.
How Do I Know if I’m Eligible for an Offer in Compromise?
There are specific factors the IRS considers when deciding whether you qualify for an Offer in Compromise:
Your Ability to Pay:
The IRS will review your financial situation, including income, assets, living expenses, and future earning potential. If paying the full debt would cause significant financial hardship, you may qualify for an OIC.
Dispute Over the Amount Owed (Doubt as to Liability):
If you believe the IRS has made an error in calculating your tax liability, you could qualify for an Offer in Compromise based on doubt as to liability. You'll need to provide evidence supporting your claim that the debt is incorrect.
Doubt Over Collectibility:
If the IRS believes you won’t be able to pay the full debt due to financial struggles, they may accept an Offer in Compromise. If the IRS determines that collecting the full amount is not feasible, this could be a valid option for you.
Exceptional Hardship (Effective Tax Administration):
In rare cases, even if you have the ability to pay your full tax debt, personal hardships—such as severe health issues—could make an OIC necessary. The IRS will evaluate your circumstances to see if an OIC is appropriate in these situations.
Take the First Step Toward Tax Debt Relief
Resolving your tax issues through an Offer in Compromise can be complex. To navigate this process effectively, it’s important to seek guidance from tax professionals. Advantage Tax Relief, located in Itasca, IL, specializes in providing comprehensive tax resolution services. Our team can help you understand if you qualify for an OIC. Call us at 630-773-3200 for a free consultation, where we’ll:
- Assess your financial situation to determine eligibility for an OIC
- Offer personalized advice on how to reduce your tax debt
- Work with you to develop a clear plan for resolving your tax issues
Begin your journey to financial relief today by contacting Advantage Tax Relief!
With years of experience in helping individuals and businesses manage tax debt, Advantage Tax Relief
offers expert guidance to ensure you find the best tax resolution solution. Whether you’re facing tax debt and need immediate relief or looking for comprehensive tax help, we’re here to assist you.
Don’t let tax debt control your life. Reach out to Advantage Tax Relief now for a no-risk consultation and start your path to tax relief!
Under the new One Big Beautiful Bill Act (OB3), qualified tips are any cash tip received by an individual with a valid Social Security number and in an occupation that 'customarily and regularly' received tips on or before Dec. 31, 2024. They include tips that are paid in cash or charged. The Treasury Department has not yet released the “official” list of occupations that qualify for the No Tax on Tips Regulations. It is expected, though, that the job titles will include but not be limited to those listed below: 1) Food & Beverage : Bartenders, Wait Staff, Servers, Chefs, and Cooks 2) Entertainment: Gambling Dealers, Change Persons, Booth Cashiers, Dancers, Musicians, Singers, Entertainers, and Other Performers 3) Personal Services: Personal Care Workers, Private Event Planners, Photographers, Videographers, Event Officiants, Pet Caretakers, Tutors, Nannies, and Babysitters. 4) Personal Appearance & Wellness: Skincare Specialists, Massage T herapists, Barbers, Hairdressers, Cosmetologists, Manicurists, Exercise Trainers, and Group Fitness Instructors. 5) Recreation : Golf Caddies, and Tour & Travel Guides. 6) Transportation : Ride Share, Taxi, and Food Delivery, Drivers, Porters, and Sky Caps. The final list is expected to be issued in October, 2025. Some implications of the No Tax on Tips Regulations. First , the deduction is for qualified tips of up to $25,000 per year regardless of how many employers you have during the year. The tax savings will be in the form of a tax deduction when you file your Federal tax return the following year. Second , qualified tips must be reported to the individual on one of three forms to be eligible for the deduction; a) Form W-2; b) Form 1099-NEC, Nonemployee Compensation; or c) Form 1099-K, Payment Card and Third-Party Network Transactions. Third , it only applies to Federal income taxes. It does not include State, Local, Social Security or Medicare taxes. Finally, the maximum annual deduction of $25,000 for single filers and $25,000 each for joint or married filing separately filers phases out by $100 for each $1,000 for taxpayers with modified adjusted gross income over $150,000 (or $300,000 for joint filers). How Advantage Tax Relief Can Assist You At Advantage Tax Relief, based in Itasca, IL, we have over a decade of experience helping individuals and businesses resolve tax issues. Our team specializes in offering personalized tax relief and tax resolution solutions tailored to your unique needs. We will work with you to assess your situation and explore your options, whether it’s an Offer in Compromise, installment agreements, or other strategies. Our experience allows us to identify the best path forward to ease your tax burden and guide you toward financial freedom. If you're facing tax debt, don't wait. Advantage Tax Relief is here to assist you with effective, professional help. Call Advantage Tax Relief today at 630-773-3200 to schedule a consultation and take the first step toward resolving your tax issues.
First, working overtime does not mean you are getting an automatic increase in your take-home pay because it is not going to be taxed. That is not what is going to happen. The tax savings will be in the form of a tax deduction when you file your Federal tax return the following year. There will be no immediate impact. Second, it only applies for Federal income taxes. It does not include State, Social Security or Medicare taxes. Third, it also only applies to the overtime premium and within certain deduction and wage limits. You can only deduct the pay that exceeds your regular rate of pay. The 'half' portion of 'time-and-a-half' compensation. For example, say you make $20 per hour and work 5 hours of overtime that week at time-and-a-half. The deduction would the Federal tax on $50 of premium pay. ($20 divided by 2 times 5 hours) Finally, the maximum annual deduction is $12,500 for single filers and $25,000 for joint filers. The deduction phases out for taxpayers with modified adjusted gross income over $150,000 (or $300,000 for joint filers).
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