As tax season approaches, you’re not alone in wondering, “What kind of tax relief am I eligible for?” There are multiple tax relief programs that can reduce your tax burden, including credits, deductions, payment plans, and negotiated settlements.
IRS tax breaks are built into the tax system and are available to anyone who meets the eligibility requirements. If you are in a complicated situation, you may choose to work with a tax professional or tax relief company to help you navigate your options.
Understanding how these programs work and who qualifies for tax relief can help reduce your tax burden this filing season.
What does “tax reduction” mean?
Tax relief refers to various ways to reduce your taxes or make your tax payments more manageable. Some can reduce your taxes, such as credits and deductions, while others, such as installment payments or negotiated settlements, can help you manage your unpaid taxes.
“Tax abatement refers to legitimate programs and strategies that help reduce a taxpayer’s burden on the IRS,” explains Josh Katz, CPA and founder of Universal Tax Professionals.
Whether you’re filing a standard tax return or working to settle unpaid taxes, knowing what tax breaks you’re eligible for can reduce the amount you owe.
Common types of tax credits available
You may be eligible for many forms of tax relief, from tax deductions to credits to payment plans.
Let’s take a closer look at the options here.
tax credit
Tax credits directly reduce the amount of taxes owed and are applied dollar-for-dollar against your tax liability. Common tax credits include:
- Earned Income Tax Credit: This tax credit is available to low- to moderate-income households and is based on income, filing status, and number of eligible children. The maximum amount for tax year 2025 is $8,046 for a family with three children.
- child tax credit: If you have one or more children under the age of 17, you can receive a tax credit of up to $2,000 per child. The full amount of the child tax credit begins to phase out once your income exceeds $200,000 for single taxpayers or $400,000 for joint filers.
- american opportunity tax credit: Eligible students can receive up to a $2,500 tax credit for paying their annual tuition. The full amount begins to phase out once income exceeds $80,000 for single filers and $160,000 for married filers jointly.
Some tax credits are refundable. This means that you may receive a tax refund if your tax liability falls below zero. Others are non-refundable. If the amount you owe is reduced to less than zero, the excess amount will not be refunded.
tax credit
Tax credits lower your income tax bill by reducing your taxable income. You may take the standard deduction or may itemize deductions. In other words, you will be deducting each eligible expense.
The standard deduction for 2025 is $15,750 for single taxpayers and $31,500 for married couples filing jointly. If you choose to itemize, you can deduct expenses such as mortgage interest, charitable contributions, and out-of-pocket medical expenses that exceed 7.5% of your adjusted gross income.
Most people use the basic deduction, but you should choose the option that gives you a lower taxable income.
IRS penalty reduction
Penalty relief waives or reduces the fees owed on unpaid taxes. You have to request it, and you usually have to prove that the payment was prevented by circumstances beyond your control, such as a natural disaster or illness. The IRS may also offer initial relief to taxpayers who have not received penalties in the past three years.
IRS payment plan
If you are facing a large tax bill, you can arrange to pay it in installments. If you owe less than $100,000 in taxes, penalties, and interest, you can apply for a short-term payment plan of up to 180 days. If you owe less than $50,000 in taxes, penalties, and interest, you can request a long-term payment plan for up to six years.
A payment plan can help you avoid having your wages garnished or levied on your bank account, but you’ll still have to pay interest and fees until you pay off the money you owe.
offer of compromise
If you owe more than you can pay, you may be able to negotiate a lower settlement with the IRS, called an offer in compromise. This partial tax relief option is designed for taxpayers facing financial hardship, but approval is not guaranteed. The IRS will evaluate your income, assets, expenses, and overall ability to pay before deciding whether to grant your settlement request.
How the IRS Determines Eligibility
The IRS determines your eligibility for tax relief based on several factors.
- income: Most tax credits and deductions phase out or disappear after a certain income level. The IRS will also consider your income when seeking certain types of relief, such as infringement claims.
- Application status: Whether you are a single filer, the head of a household, or a married couple will affect your eligibility and the amount of tax relief you can receive.
- Financial difficulties: The IRS will consider your financial situation when you request a payment plan or similar type of relief.
- Compliance history: Your past tax payments can also affect what tax relief you qualify for.
- Type of tax payable: The type of tax you pay, such as income tax or payroll tax, can affect the relief available to you.
Tax relief based on specific circumstances
Your personal circumstances may affect your tax relief options. Here are some examples:
Self-employed and freelancers
If you are self-employed or freelance, you must pay your own estimated taxes quarterly. If you pay too little, you may be charged a penalty. If you need to apply for a payment plan or similar type of tax relief, it’s important to keep good records of your income and expenses. You also want to keep a record of any deductions you take for business expenses or your home office.
financial difficulties
If you have experienced financial hardship due to job loss, medical bills, or other emergencies, you may be eligible for relief, such as a payment plan or reduced settlement amount. The IRS looks at your financial hardship when determining your eligibility for this type of tax relief.
seniors and retirees
Seniors and retirees require special considerations when filing taxes, such as Social Security benefits and retirement account withdrawals. If you request hardship-based tax relief, the IRS may consider all sources of your income.
When tax relief from experts makes sense
The IRS offers tax relief options to everyone who qualifies, but it can be difficult to understand them all, especially if you have a complex situation. If you need additional support, a tax relief company may be able to provide assistance.
“If you receive an IRS notice that you don’t understand, face a collection action such as a lien or levy, have an unfiled tax return, or have a large debt that you can’t pay (often more than $10,000), professional help is critical,” says Katz.
A tax relief company can help you select tax relief options and negotiate with the IRS on your behalf. Companies operating in this space include Optima Tax Relief, Anthem Tax Services, Alleviate Tax, BC Tax, and Priority Tax Relief.
“A reputable firm will provide IRS negotiation expertise,” says Katz. “It can be helpful if you feel overwhelmed, don’t have time to navigate the IRS process, or need representation when dealing with the IRS,” Katz says.
How to find out what tax relief you qualify for
There are several ways to find out what tax breaks you qualify for.
- Visit the IRS website. Visit IRS.gov for guides to tax relief programs and calculators such as the Withholding Tax Estimator and Sales Tax Credit Calculator.
- Check for notices from the IRS. Please read any notices you receive from the IRS carefully, as they may contain information about tax credits and instructions on how to get help.
- Please consult a tax professional. To learn about tax relief and evaluate your personal situation, please consult a certified tax professional or tax relief company.
Be careful when applying for tax reduction
If you are considering using tax relief services, be wary of exaggerated promises for tax relief.
“There are unscrupulous agents in the industry who charge high upfront fees with empty promises,” Katz warns. “Avoid companies that guarantee a certain outcome or ask for large fees before considering your case.”
Also beware of tax reduction scams. Unsolicited phone calls, texts, and social media messages could be scammers trying to steal your money or personal information. The IRS primarily communicates with taxpayers through official letters sent by mail.
“Seek help from an established registered agent, CPA, or tax attorney, and always check credentials and reviews,” Katz recommends.
conclusion
The IRS offers a variety of tax breaks to help you manage your tax payments, but eligibility is individual and situational. Eligibility often depends on factors such as income, family size, and tax history. Knowing what tax relief options are available to you can help you make informed decisions about your situation and potentially reduce your tax bill.
Frequently asked questions about tax relief eligibility
Does a reduced tax mean that the tax liability is waived?
No, a tax credit does not mean you are automatically exempt from taxes. Tax relief actually refers to various IRS programs that can reduce your tax liability, including credits, deductions, and penalty reductions. If you negotiate a compromise, you may be eligible for a partial tax exemption. This allows you to settle your tax debt for less than what you owe.
Are self-employed and freelance workers eligible for tax relief?
Self-employed and freelance workers can qualify for many different types of tax relief, including tax credits, deductions, and payment plans. Some tax relief options are designed specifically for self-employed individuals, such as the qualified business income deduction and the home office deduction.
Should I contact the IRS directly or work with a tax relief company?
You can contact the IRS directly for free about your tax relief options, or you can work with a reputable tax relief company for a fee. A tax relief company can help you select and negotiate options on your behalf and can help with complex tax situations. However, there are no guaranteed results. The IRS always gives final approval.
