Hillhurst Tax Group

Tax Relief in Los Angeles

Tax relief in Los Angeles is a major issue for Angelenos.

A tax relief attorney in Los Angeles can help persons minimize both their tax liabilities and any problems resulting from their unpaid tax liabilities.

The Hillhurst Tax Group has been very successful in providing tax relief for its Los Angeles clients.  The aggressive representation of the Hillhurst Tax Group can give you the tax relief that you need to move on with your life without the overwhelming burden of high tax liabilities that you cannot pay.  

What is Tax Relief?

Tax relief can be defined as taking action to minimize the burden of tax liabilities.  In Los Angeles, tax relief can take two forms.

First, people in Los Angeles face the burden of high California state income tax rates as well as high Federal income tax rates. Tax relief involves helping Los Angeles taxpayers take advantage of all favorable income tax provisions and applicable deductions and credits to minimize their tax liabilities.

Second, when Los Angeles taxpayers cannot pay their tax liabilities, they face the burdens of interest, civil penalties, losses of assets from tax garnishments and levies, and even criminal prosecutions. Tax relief also involves helping Los Angeles taxpayers take advantage of all applicable programs to settle their unpaid tax liabilities in a favorable manner. 

California and Los Angeles Tax Rates

Los Angeles taxpayers pay high California state income tax rates. In fact, California is considered to have the highest tax rates in the country.  

California state income tax rates range from 1% to 13.3% of taxable income. The more taxable income you earn, the higher will be your applicable California state income tax rate.

As examples:

  • If you are single, and your taxable income is $50,000, you will be in an 8% tax bracket.
  • If you are single, and your taxable income is $100,000, you will be in a 9.3% tax bracket.
  • If you are married and file jointly with your spouse, and your taxable income is $50,000, you will be in a 4% tax bracket.
  • If you are married and file jointly with your spouse, and your taxable income is $100,000, you will be in an 8% tax bracket.

When you consider Federal income tax rates (which generally range from 10% to 37%), in addition to California state income tax rates, the tax burden faced by Los Angeles taxpayers is quite steep.

Why You Might Need Tax Relief

Tax liabilities can eat up a huge portion of your income in Los Angeles. If you feel burdened by paying too much in tax liabilities, tax relief can reduce your tax liabilities and enable you to derive more benefit from your income.

In addition, because of an unexpected event that has an adverse financial impact on you (such as a job loss or illness), you may be unable to pay a tax liability that you owe in Los Angeles. If you are in this situation, tax relief can provide you with an effective solution to resolve your outstanding tax liability in a favorable manner and move on with your life. 

Failure to Pay

If you fail to pay a tax liability when it is due, you can be subject to a failure to pay penalty.

The Federal failure to pay penalty generally is .5% of any Federal tax liability owed after its due date for each month, or part of month, that it is outstanding, up to a maximum of 25% of such liability.

The California failure to pay penalty generally is (i) 5% of any California tax liability owed after its due date, plus (ii) .5% of such liability for each month, or part of month (not to exceed 40 months), that it is outstanding.   

Failure to File

If you fail to file a tax return when it is due, you can be subject to a failure to file penalty.

The Federal failure to file penalty generally is 5% of any Federal tax liability owed for each month, or part of month, that the related tax return is late after its due date, up to a maximum of 25% of such liability.

The California failure to file penalty generally is 5% of any California tax liability owed for each month, or part of month, that the related tax return is late after its due date, up to a maximum of 25% of such liability. 

A failure to file penalty, as well as a failure to pay penalty, can be waived if you can establish “reasonable cause” for the failure.

Tax Crime Penalties

The failure to pay and failure to file penalties impose civil penalties on you.  Even worse, it is possible that certain delinquent behavior concerning your taxes can expose you to criminal penalties.

There are many different types of criminal tax penalties, often described as tax fraud or tax evasion.  A common example of a tax crime is filing a false tax return, including by failing to report certain income or overstating certain deductions or credits.

A tax crime can be a felony and expose the taxpayer to a significant monetary fine and even incarceration.

There are both Federal and California tax crime penalties.

Offer in Compromise (OIC) Program

One form of tax relief is the offer in compromise (OIC) program.

With an OIC, you make an “offer” to “compromise” your tax liabilities – to pay a certain lesser amount to discharge your outstanding tax liabilities.

Both the Internal Revenue Service (IRS), as to Federal tax liabilities, and the California Franchise Tax Board, as to California tax liabilities, have OIC programs. 

An OIC generally will be approved when the amount offered represents the most that can expect to be collected within a reasonable period of time.  Your ability to pay, income, expenses, and asset equity are among the factors considered in determining if your OIC should be accepted.

Bankruptcy for Tax Relief

Another form of tax relief is bankruptcy.  Certain tax debts can be “discharged” (eliminated) in bankruptcy.

Among the requirements for you to discharge a tax debt in bankruptcy are that the tax debt is at least three years old, you filed a tax return for the tax debt at least two years before filing for bankruptcy, the IRS assessed the tax debt at least 240 days before you filed for bankruptcy, and you did not commit tax fraud or tax evasion.

Collections Due Process for Tax Relief

The Collection Appeal Program is another form of tax relief.

Administered by the IRS, the Collection Appeal Program allows a taxpayer to file an administrative appeal of certain IRS collection actions, including liens, levies, seizures of assets and funds, and rejections, terminations, or modifications of installment agreements.

You can request a Collection Appeal Program proceeding on IRS Form 9423.

Tax Relief Step by Step: How to Claim Tax Relief

Learn How Tax Relief Works

An experienced tax relief company, such as the Hillhurst Tax Group, will follow a five-step process in properly handling your tax relief issue.

First, the Hillhurst Tax Group will meet with you and understand your specific need for tax relief.  Communication with you is critical, as the Hillhurst Tax Group will define the specific tax relief problem that you need solved.

Second, the Hillhurst Tax Group will propose specific solutions to your tax relief problem.  Whether it is advising you to claim an overlooked deduction to reduce your tax liability or to file an OIC to settle an outstanding tax liability, the Hillhurst Tax Group has the knowledge and experience in tax relief matters to recommend effective solutions for you.

Third, you and the Hillhurst Tax Group will agree on the course of action that you should take to address your tax relief problem.  The Hillhurst Tax Group will not initiate any action without your consent.

Fourth, the Hillhurst Tax Group will help you implement the specific course of action that has been selected.  Whether it is amending a tax return or requesting a Collection Appeal Program proceeding on IRS Form 9423, the Hillhurst Tax Group can help you complete the intended course of action to resolve your tax relief issue.

Fifth, the Hillhurst Tax Group will monitor the progress of your specific course of action.  In particular, the Hillhurst Tax Group keeps close track of changes in Federal and California tax law and regulations and will advise you if any modifications to your intended course of action are appropriate.      

The Highest Rated Firm for Tax Relief in Los Angeles

The Hillhurst Tax Group has the necessary knowledge, experience, and track record in all kinds of tax relief matters to help Angelinos with their tax relief problems. That is why the Hillhurst Tax Group is the highest rated firm for tax relief in Los Angeles.

If you want to successfully resolve your tax relief problem, you should retain the aggressive representation of the Hillhurst Tax Group. Please email info@hillhursttaxgroup.com or call (323) 486-3314 to schedule your free consultation with the Hillhurst Tax Group. 

FAQ 

Where’s my tax relief check?

In response to the adverse financial impact from the COVID-19 pandemic, the IRS has issued three “Economic Impact Payments” to certain taxpayers in years 2020 and 2021.  The Hillhurst Tax Group can help you determine if you are eligible for these “Economic Impact Payments” and, if so but you have not received them, how can you obtain them.

Does tax relief hurt your credit?

With the possible exception of bankruptcy, other tax relief alternatives, such as an OIC or the Collection Appeal Program, should not hurt your credit.

How far back can i claim tax relief?

If you are amending a tax return to reduce your tax liability, you generally must do it within three years of the original tax return to claim such tax relief.

Can you claim tax relief on private school fees?

Private school fees generally are not deductible. However, there is a tax benefit in that investment income from a Coverdell Education Savings Account (which can be used to make distributions to private schools) is not subject to tax liability.

Do i get tax relief on employer pension contributions or how do i claim pension tax relief?

There are several opportunities for tax relief in the pension area. From the employer’s side, pension contributions are deductible to the employer and the investment income earned on pension plan assets generally is not subject to tax liability. From the employee’s side, there is a deferral of tax on the employee’s pension account generally until the employee receives a distribution from the pension plan.

What is a family tax relief credit?

The American Rescue Plan Act of 2021 expands the child tax credit in 2021 for certain families to $3,000 per child up to age 17 and $3,600 per child under age six. The Hillhurst Tax Group can help you determine how much child tax credit your family can receive.

What tax relief can I claim as a landlord?

As the owner of real estate, a landlord can claim tax relief by deducting depreciation as well as many of the landlord’s out-of-pocket expenses in owning real estate.  In addition, it is possible that a landlord can claim tax relief by receiving favorable capital gains tax treatment or not being subject to any tax liability (on a like-kind exchange) on a sale of the landlord’s real estate. 

Can you get tax relief on child maintenance payments?

Child maintenance or support payments are not deductible when paid and not taxable when received.

How does mortgage tax relief work?

You can deduct the interest paid on a mortgage of up to $1,000,000 of debt for your home (up to $750,000 of debt if the home was purchased after December 15, 2017). You cannot deduct the principal on a mortgage.

Are tax relief companies worth it?

While the Hillhurst Tax Group charges for its tax relief services, it always will use its best efforts to provide you with a significantly greater amount of tax relief than the amount it charges.

What is the best tax relief company?

For its knowledge, experience, and track record in helping Angelinos with all kinds of tax relief matters, the Hillhurst Tax Group is the best tax relief company in Los Angeles.

How does claiming tax relief work for married couples?

If you file a joint return with your spouse, you will benefit from many of the tax relief opportunities claimed by your spouse.