The “What Ifs” of an Economic Downturn

Video: What If? The Internal Revenue Service recognizes that many people may be having difficult times financially. There can be a tax impact to events such as job loss, debt forgiveness or tapping a retirement fund. If your income decreased, you may be newly eligible for certain tax credits, such as the Earned Income Tax Credit. Most importantly, if you believe you may have trouble paying your tax bill contact the IRS immediately. There are steps we can take to help ease the burden. You also should file a tax return even if you are unable to pay so you can avoid additional penalties. Here are some “What if” scenarios and the possible tax impact: Job RelatedWhat if I lose my job? What if I receive unemployment compensation? What if my income declines? What if I am searching for a job? What if my employer goes out of business? What if I close my own business? What if I withdraw money from my IRA? What if my 401(k) drops in value? Debt RelatedWhat if I lose my home through foreclosure? What if I sell my home for a loss? What if my debt is forgiven? What if I am insolvent? What if I file for bankruptcy protection? Tax RelatedWhat if I can’t pay my taxes? What if I did not receive an economic stimulus payment? What if I can’t pay my installment agreement? What if there is a federal tax lien on my home? What if a levy on my wages is creating hardship? What if I can’t resolve my tax problem with the IRS? What if I need legal representation to help with my tax problem but can’t afford it? Related Item: Publication 4763, Job Related Questions During an Economic Downturn Source IRS