Owe Money to the IRS? 4 Steps to Lower Your Debt

Are you one of the millions of Americans who owe money to the Internal Revenue Service (IRS)?  Whether you are behind because you have been overwhelmed and have not had time to get your taxes done, or you fear that you simply do not have enough money to pay, it is important to get a handle on your personal tax situation as soon as possible.

Once the IRS realizes that you have not paid your taxes, they will begin to reach out to you. First by email, then communication will get more serious the longer your taxes remain unpaid.  The most serious consequences are wage garnishments, levies on your bank account and liens on your property. These consequences should be avoided at all costs as they can lead to serious financial hardship. There are several important steps you can investigate today to lower your tax debt and get back on the road to financial freedom:

How to Help Lower Your Tax Debt

  1. Installment Agreement: An installment agreement is a monthly payment plan that you establish with the IRS so that you can pay your debt over time, rather than in one lump sum.  It’s essentially like a credit card payment and you will pay over a period of months (or years) your debt as well as interest and fees that have accrued.  In some cases, individuals qualify for a partial payment installment agreement, which allows you to make monthly payments on a reduced dollar amount.
  2. Offer In Compromise: An offer in compromise gives you the opportunity to settle your debt for less than you actually owe.  This is particularly useful when you owe the IRS more money than you can afford.  An offer in compromise requires much paperwork and is not always granted, but can save you thousands of dollars if you qualify.
  3. Bankruptcy: There are instances in which your tax debt may be eligible to be waived under Chapter 7 or Chapter 13 of the Bankruptcy Code. Doing so requires some intricate knowledge of tax law and bankruptcy law so you may want to consult with a professional if you are considering this route.
  4. Seek Professional Tax Support: Getting out from under tax debt with the IRS is not easy and there is no magic way to make your back taxes go away.  Working with a professional and experienced tax firm can help you determine the best possible course of action for your situation.  Beware of companies promising to get rid of your tax debt, you may want to continue looking.

Reach Out Tax Relief Today for More Information

PlaceFive Tax Relief has extensive experience working directly with the IRS to help thousands of Americans find their way out of tax debt.  Our team understands complex tax law and can review your tax returns and income documentation while being open and honest about the strategy that has the best chance of success.  Our team can help you with the detailed paperwork required should you decide to move forward with an Offer in Compromise or installment agreement request.  You can make progress and get rid of your tax debt once and for all.  Our team will work hard for you.

Love and Mortgage: Should Newlyweds Buy or Rent a Home?

Somewhere in your mind, you might have an idealized image of a newly married couple triumphantly sweeping into a dream home with the wife in the husband’s arms. As corny as the tradition might seem, you can also see it as a powerful symbol — two people making their first entrance into the home they now share as owners.

Should you and your new spouse follow that example, or do you have reservations about adding a mortgage to the mix? Consider some of the pros and cons of renting vs. buying as newlyweds, and then take your time in deciding whether home ownership is another threshold you want to cross together.

Your Solution Depends On Your Situation

You’ve probably made dozens of decisions together on your way to the altar, making the call on everything from the registry to the diplomatically arranged seating chart at the reception. And now’s not the time to give in to judgment fatigue.

Take some time to evaluate the respective merits. You may find that personal finances, career aspirations and even the value you place on independence vs. convenience could influence your decision of whether to rent or buy.

The Case for Renting

Some of the reasons that could make renting a home preferable to buying include:

Lower Start-Up Costs — Moving into an apartment typically means paying some moderate expenses, such as first and last month’s rent, specified deposits and the like. Buying a home typically means spending several thousand dollars on a down payment, closing costs, agent’s commission, attorney’s fees and more. If you still haven’t figured out how to pay off the honeymoon, the initial investment could loom large in your decision-making.

More Mobility — The U.S. Census Bureau reports that after age 18, the typical American can expect to move nine times. If you happen to get a new job in a different state, you’ll have a much easier time (relatively speaking) breaking a lease than you would be selling a house.

Repairs Aren’t Your Responsibility — If the toilet springs a leak at 3 a.m., a renter can call the landlord to get it fixed. For homeowners, the burden of arranging and paying for repairs, and possibly filing an insurance claim, falls entirely on them. When it comes to upkeep, a conscientious landlord can be a real convenience.

The Case For Buying

Factors such as these could tip the scales in favor of homeownership:

It’s Usually More Economical — For couples who plan to stay in the same area for several years, buying a house is generally considered the more affordable choice. The expert consensus favors ownership as a much better source of value than renting in just about every U.S. housing market. Also, you can help protect your investment with a home insurance policy that may provide coverage for weather damage, break-ins, and other hazards.

Ownership Builds More Wealth — One aspect of the pro-buying argument revolves around the central idea of wealth accumulation: Homeowners nurture an investment in something that will one day belong to them, rather than simply renting space from month-to-month or year-to-year. Even if you move to a new house before you pay off the mortgage, you still have the equity you’ve built up in your current home.

A Sunnier Market Outlook — Although memories of the housing bubble bust still linger, many indicators point to a stabilized recovery. New regulations have helped curtail risky lending practices, home prices have reached realistic levels and the economy has rebounded. With mortgage rates at historic lows, 2016 could be an advantageous time to become homeowners.

Whichever Way You Go, Go Thoughtfully

The decision to buy or rent as newlyweds depend on immediate realities and long-term possibilities. Do you have plenty of money on hand? Do you have job security? When might you start a family?

You’ll need to consider all these factors, and more, as you figure out whether crossing the threshold right away is a realistic option or just a romantic notion.

Understanding the Key Terms on Your Warranty

If you're reading through your new car warranty for the first time, or you are considering purchasing a new car, there may be a few terms in there that you don't know. To help you understand your warranty, we've defined a few key terms:

  1. Bumper-to-Bumper: a type of warranty also commonly referred to as a basic or standard car warranty. All automakers offer a basic warranty for a set amount of time or miles. This warranty covers basic, non-engine parts of the car such as the power steering, fuel system, lights, sensors, audio system, brakes, and climate control. If any of these parts malfunction while you are covered with a bumper-to-bumper warranty, your dealer should pay to fix them.
  2. Deductible: the amount of money you pay the repair facility for repairs on your vehicle. Some warranties cover the cost of all repairs and labor, but others require you to pay a set amount out of pocket.
  3. Federal Emission Defect Warranty: a type of warranty that covers repairs your car needs to meet the Environmental Protection Agency (EPA) standards. This includes defective materials and repairs.
  4. Plan Term / Plan Expiration: the length of time or the amount of mileage your warranty covers. When you reach the end of your plan term, for example 3 years / 60,000 miles, your warranty plan will expire.
  5. Powertrain: a type of warranty that covers certain "powertrain" parts of your vehicle. These parts include the transmission, engine, and drivetrain (transfers power from the engine to the wheels and down). If your powertrain components are found defective or damaged before your powertrain warranty expires, the manufacturer will pay for replacements.
  6. Roadside Assistance: provides owners with assistance if the vehicle breaks down. This often includes a number you can call 24-hours a day, 365 days a year for emergency assistance, towing, help with a flat tire, or fuel problems.
  7. Surface Corrosion: rust on the outside of your car. Substances such as salt and iron oxide can make it easy for rust to form on your car. Some warranties do not protect against surface corrosion.
  8. Transferability: when you sell your car and transfer your warranty to the new owner. Car manufacturers may allow you to transfer the entire warranty, half, or none.
  9. Wear and Tear: when components of your car stop working due to external conditions. This means that your air system or radio stops working because of operational error, not because the parts can wear out. Some warranties cover wear and tear.

Should you buy or lease solar panels? The answer is yes.

More than a million American families and businesses have installed solar panels – and with each passing day, thousands more are joining them.

People across the country are using solar power to save money, reduce carbon pollution, increase energy independence, conserve water, and create a more resilient electric grid.

There are more ways than ever to adopt solar technology. Beyond buying a panel system outright, a homeowner can choose among solar loans, leases, power purchase agreements, or other customized payment plans. These options have helped solar become commonplace, but myths and misconceptions about them still abound, from online marketplaces to mainstream media outlets.

SolarCity has installed more than 9 million solar panels for upwards of 285,000 customers under all the options listed above. What we’ve learned is that there is no one-size-fits-all approach; the best option depends on the customer’s situation.

One of the most common questions we get about financing solar panels, however, is a pretty simple one: buy or lease?

 

The answer of course depends on your unique circumstances. Here are some considerations to think through.

Should you buy your solar panels?

Purchasing a solar power system – especially through a loan – is the fastest-growing way to go solar in the U.S.

Cash purchases and loan options can be very attractive if you are looking to maximize the long-term financial benefits of going solar.

Solar loans offer a range of payment terms — the most popular tend to be $0-down with fixed monthly payments. One way to differentiate among loan options is by looking at the services that are included. The best loans include a full 20-year system warranty and a performance guarantee (which encourages the provider to ensure the system is always delivering on expectations). While some service plans don’t amount to much in practice, a full built-in warranty is extremely valuable: replacing a power inverter, for example, can alone be worth more than a thousand dollars for a typical household.

When considering a loan, it’s also important to look for a low interest rate that allows you to pay off the system over a reasonable time period (e.g. 10 to 20 years), with an option to pay it off sooner if you’d like (at no penalty).

Buying a solar power system is likely to save you more $ in the long term

A key reason that buying a solar power system (whether outright or through a loan) can help you maximize financial benefits is the opportunity to claim a valuable tax credit. The U.S. government currently offers a 30% tax credit to people who purchase a solar power system. If your federal taxes are high enough to qualify for the tax credit yourself, then buying a solar power system is likely to produce greater long-term energy cost savings than a lease.

The chart below shows this comparison for an example home in California: buying a solar power system outright is likely to yield the greatest long-term savings (relative to paying your same old utility bill), followed by the loan option, and then the lease option (check out the next section to learn more about solar leasing).

While the exact financial outcome is naturally different for each option, the key point is that the money saved by any of the options in this example can reach many thousands of dollars.

 

Consider, too, that after you pay off a purchased system, it’s yours to keep – so things can get even better down the road. In particular, customers that own their system can look forward to using solar electricity that doesn’t require any monthly payments to anyone.

To make sure you realize the full benefits of solar ownership, it’s crucial to carefully review your provider’s terms and conditions. You should make sure you are protected in all cases of equipment failure (including the power inverter), as well as protected against unfair circumstances like a lender putting a primary lien on your house.

Why should you buy solar panels (cash or $0 down loan)?
  • You want to pay less for electricity, be more energy independent, and save the planet.
  • You want to own your solar panels.
  • Your federal taxes are high enough to qualify for the solar investment tax credit.
  • You are focused on maximizing the financial benefits of going solar.
  • Full 20-year system warranty, monitoring, and performance guarantee
 

Should you lease your solar panels?

Solar leases – and similar arrangements called Power Purchase Agreements (PPA’s) – have made solar power more accessible for a wider range of homeowners, and have driven a tremendous amount of growth in residential solar. Their popularity is rooted in delivering instant gratification: they allow many customers to immediately pay less for solar electricity than utility electricity. While lease customers typically are unlikely to save as much as loan customers over the long term, many solar lease customers can start saving money right away.

These savings can add up to thousands of dollars over the life of the system, while also preventing thousands of pounds of global warming pollution from power plants.

A common reason that a solar lease may suit a particular household is simply related to taxes. As mentioned previously, the U.S. government currently offers a 30% tax credit to people who purchase a solar power system. But if your yearly tax bill is quite low, you may be ineligible to claim the tax credit yourself. In this case, a lease is almost certain to be a better choice. Regardless, the availability of the tax credit can still benefit you, since a solar provider can use it to reduce your monthly lease payments.

solar lease option

The industry’s best leases are offered with $0 down and fixed monthly payments, as well as service packages that are often more robust than those offered with loans. This not only includes strong repair and equipment replacement services and performance guarantees, but expansive insurance coverage. 

In all cases, solar leases should adhere to consumer protection guidelines published by the Solar Energy Industries Association, and contracts should comply with Solar Energy Finance Association standards.

Solar leases can give homeowners extensive benefits, all without entailing personal ownership of solar panels. After a 20-year lease term, the homeowner has the option to renew their lease agreement at a 10% discount relative to average utility rates at that time.

Why should you lease solar panels ($0 down)?
  • You want to pay less for electricity, be more energy independent, and save the planet.
  • You want to use solar power, but don’t care about owning the panels.
  • Your federal taxes are too low to qualify for the solar investment tax credit.
  • You value immediate financial savings over larger long-term savings
  • Full 20-year system warranty, monitoring, and performance guarantee
 

Regardless of how you pay to get solar power – lease or buy – you‘ll want a panel system that is built to last. The best systems hold up well for 35 years or more. The amount of money you save by going solar – and your positive impact on the planet – depends on how much power your panels produce. To make sure your system goes strong for decades, it’s important to select an attentive solar provider that can honor its warranty decades from now.

With a solar lease or loan from a reputable provider, you also have full control in deciding on your final system design and placement, and you can transfer your lease or loan to the next owner in case you sell your house. A common misconception is that a solar lease or loan can make it difficult to sell your house, but that’s simply not true if you have a responsible solar provider. 

What Should You Know About Home Warranties When Flipping a Home?

With foreclosures and short sales being offered for far less than their market price in many parts of the country, buying and flipping these homes can provide local investors with a unique opportunity to earn a large profit over a fairly short renovation period.

However, those who have financed this real estate through high-interest means may need to make a sale before a balloon payment comes due. Having a home sitting on the market for weeks or months at a time can be a costly prospect.

In some cases, offering potential homeowners the promise of hassle-free ownership through a home warranty can be the difference between a home that’s snatched up quickly and one that languishes on the market for months.

Read on to learn more about the coverage afforded by a home warranty, as well as some of the factors you’ll want to consider when deciding to purchase a warranty for a home you’re planning to flip.

What a Home Warranty Covers

A home warranty is a type of insurance policy designed to protect home buyers from any sudden and unexpected costs upon the purchase of a new home. After spending money on a down payment, moving expenses, and the other costs inherent in moving a household, the last thing a home buyer wants to deal with is an expensive HVAC repair or leaking dishwasher.

By offering a home warranty as part of the sale, sellers can provide buyers with peace of mind, which is especially important when selling a recently renovated home.

Most home warranties offer coverage that complements a homeowners’ insurance policy. While homeowners’ insurance can pay to replace appliances that are damaged in a fire or when a tree crashes through a window, a home warranty will pay to replace appliances that malfunction or stop working entirely, even paying to replace the damage that can result from a leaking refrigerator or clogged dishwasher.

Home warranties can cover larger home systems like the furnace, air conditioner, and water heater as well. During the time period for which the home warranty is in effect (usually a year or two after purchase), any problems with these systems should be covered unless subject to a specific policy exclusion.

Although home warranties are meant to benefit the buyer by protecting from unforeseen expenses, they can provide benefits to the home seller as well. In today’s litigious environment, many home buyers won’t hesitate to file a breach of contract lawsuit if they run into problems with their new home that arguably should have been disclosed prior to sale.

Lawsuits are particularly a problem when it comes to home flipping, as the quick renovation and sale process often doesn’t provide enough time to see whether any plumbing, insulation, or other problems develop.

What to Consider When Flipping a Home

There are a few factors you’ll want to take into account when deciding whether to offer a home warranty on a flipped home that you’re hoping to sell. Although home warranties can be a low-cost way to offer peace of mind to a buyer, they’re not right for every sale transaction.

Local Market Conditions

In some hot markets, like San Francisco and Seattle, homes are being snapped up at well above listing price hours after they hit the market. If you live in one of these areas, or another part of the country experiencing a real estate boom, you may not need to worry about a home warranty as a selling point; it’s likely your home will quickly sell regardless.

On the other hand, those who are in slower-moving real estate markets may want to consider offering a home warranty to provide a bit of an edge over similar homes in the area. The longer a home sits on the market without any “bites,” the more it may become a turnoff to prospective buyers, so doing all you can to make your home marketable before it hits the market can be the key to a quick sale.

Manufacturer Warranty Coverage

If your flip included replacement of your home’s HVAC system or appliances, it’s likely these items are covered by their own manufacturers’ warranty; offering a home warranty to cover these items could be redundant, costing you extra without providing any added benefit.

Instead, if you choose to offer a home warranty, you may want to exempt appliances and other items that are already covered in favor of adding renovations that aren’t subject to their own separate warranty.

By keeping these factors (and the ebb and flow of your own local real estate market) in mind when flipping a home, you’ll be in a prime position to gain as much profit as possible from your recent foreclosure or short sale purchase.