Money Management

The IRS has developed a program to help taxpayers pay off delinquent tax bills. Read on to learn more about the Fresh Start Program. 

If you owe money to Uncle Sam, it may feel like a heavy weight on your shoulders. After all, the U.S. government has a host of remedies available to get you to pay. However, if a tax bill follows you like a dark cloud, the IRS provides a way out. It’s called the Fresh Start Program, and it’s open to any taxpayer who owes money and struggles to make payments. If that describes your situation, keep reading to learn more about how the Fresh Start Program can help.

What is the Fresh Start Program?

It’s no secret that many Americans struggle to pay their taxes. The Fresh Start Program was designed to simplify paying taxes by streamlining procedures and offering payment plans. Here are a few benefits of the program:

May prevent a lien from being filed against youIn some cases, it can remove an existing tax lienReduces penalties and interest on penalties

Who qualifies?

Eligibility requirements include:

You must have filed all required tax returns for the past three years.You can’t owe more than $50,000 in taxes, including interest and penalties. If you do owe more than $50,000, you’ll need to reduce your debt down to $50,000 or less before starting the program.You must agree to pay your outstanding tax obligations within six years.You must be up to date with all required estimated tax payments for the current tax year.You cannot be involved in any tax evasion or fraud activities.

Four payment options

There are four different options associated with the IRS Fresh Start Program. The one that’s right for you depends on the specific circumstances of your case.

1. Installment agreement

Once approved, you’ll make affordable monthly payments to the IRS until taxes are paid in full. The IRS will continue to charge interest on the amount owed. However, once three direct installment payments are made and the total tax debt balance falls below $25,000, any existing federal tax liens or levies will be removed.

2. Offer in Compromise (OIC)

OIC allows qualified taxpayers to make a settlement based on a reduced amount in place of payment in full. To qualify, you’ll need to meet these eligibility requirements:

You’ve filed all tax returns and made all estimated payments.You’re not in an open bankruptcy proceeding.You have a valid extension for the current year return.

And if you’re self-employed, the IRS will want to know that you’ve made tax deposits for the current and past two quarters.

3. Currently Not Collectible status

This status allows you to place payments on hold during periods of financial difficulty. Eligibility is dependent upon showing that paying both living expenses and back taxes will cause undue hardship. This status does not forgive tax debt but delays payment until the taxpayer is back on solid footing.

4. Penalty abatement

If you’ve been hit with significant tax penalties, you may be eligible for penalty relief. You’ll need to provide the IRS with information regarding why your tax bill has not been paid. If the IRS finds that there’s a reasonable cause for your existing tax bill, penalties may be forgiven. Penalties can add up quickly. Once those penalties are wiped away, you may find yourself in a better position to pay down the tax debt, or even put a few extra dollars in an emergency fund each month.

How to apply

To apply, write a letter to your regional IRS office informing it that you’re interested in Fresh Start. Include a copy of IRS Form 843 explaining your situation. Include as much documentation as possible to bolster your claim. This may include insurance claims, death certificates of family members, medical statements, layoff notices, or any other proof of financial hardship.

If the IRS initially denies your request, contact a tax relief company. Find out how much it charges for its services and how successful its appeal efforts have been. If you have enough in your bank account to easily cover the charge, it may be worth utilizing its services. Your best bet is to work with a company recommended by a friend or family member. If that’s not possible, research online customer ratings for area tax relief companies.

The Fresh Start Program does not make getting out of tax debt easy, but it does provide a path that makes it possible to find your way out.

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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Is the U.S. economy headed for a downturn? Read on to see what the Federal Reserve thinks. 

For much of 2022, financial experts were warning consumers to brace for a 2023 recession. The logic was that interest rate hikes on the part of the Federal Reserve were apt to lead to a broad pullback in spending. And that alone had the potential to drive the economy into a downward spiral.

So far, the economy has been resilient. But a combination of rate hikes and the recent banking industry crisis have the potential to fuel a mild recession later on in 2023, the Federal Reserve recently acknowledged. And that’s a scenario worth preparing for.

How to gear up for a recession

Economic recessions can take on different forms, and a mild one may not be so painful or prolonged. But it’s important to prepare for a recession nonetheless, and one of the best ways to do so is to build a solid emergency fund.

At a minimum, you should aim to have enough money in your savings account to cover three months full of essential expenses. That way, if you were to lose your job, you’d have cash reserves to fall back on during a subsequent job search. And, ideally, you wouldn’t have to rack up immediate debt on your credit cards just to stay afloat.

In addition to shoring up your savings, it’s a good idea to work on chipping away at existing high-interest debt, such as a credit card balance you might still have. If you lose your job during a recession, the last thing you’ll want is extra financial obligations to deal with.

Finally, it could be a good idea to secure a backup income stream in case you wind up falling victim to layoffs at your place of work. The good news is that the gig economy remains strong, so there may be plenty of options for you to pursue. A side gig could not only make it easiest to boost your savings and pay off lingering debt, but also, it’s something you can potentially ramp up on should that need arise.

Will a mild recession lead to another round of stimulus checks?

The last time lawmakers approved a round of stimulus checks was March of 2021 as part of the American Rescue Plan. Back then, unemployment was very high and many people could not return to a job due to health concerns. If a mild recession hits later on in 2023, it’s unlikely that lawmakers will move forward with federal stimulus aid.

For one thing, the situation may not become dire enough to warrant it. Also, lawmakers did face their share of criticism the last time they were generous with stimulus aid.

In fact, some financial experts point to generous pandemic-era stimulus policies as the reason inflation has been surging since mid-2021. So it’s pretty fair to assume that lawmakers will opt to err on the side of caution with stimulus funds this time around.

Of course, if the economy takes a drastic turn for the worse, that’s a different story. But that’s also a scenario no one should hope for, even if it would, in theory, make a follow-up stimulus round more likely.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Buying generic brands is one of the easiest ways to cut your grocery bill. Keep reading to learn which store carries the best generic brand items. 

There was a time when the only people who purchased generic brands were those who could not afford “the real thing.” Through the years, though, the truth has seeped out: Sometimes, the generic brand is better than the big-name brand.

We looked at some of the largest grocery retailers in the U.S. to determine which retailer has the best generic brands. Given how many stores carry generics, it became a little tricky to choose a single winner. In the end, it came down to the store with the greatest selection of highly regarded products.

Aldi has the best generics

It was easy to spot generic products back in the 1970s. Many of them had plain white and black labels. Sitting among colorful boxes of Kraft, Del Monte, and Duncan Hines, generic products looked like orphans, alone and uncared for.

What Aldi figured out before their competitors is that generic items are often as good or better than their name-brand counterparts. And so, Aldi filled its stores with products purchased from smaller, less expensive third-party manufacturers. Before being placed on the shelf though, Aldi puts its own label on the products. Once goods are on the shelves, Aldi can sell them at a deep discount.

There are four things to know about generic products at Aldi:

90% of what’s sold in Aldi is a store brand.Aldi’s Simply Nature line of organic items includes a wide variety of foods, including milk, bread, cereal, frozen foods, and pasta.Shoppers can easily pay 50% less for an Aldi store brand than they would pay for the same product in a name brand. That’s quite a lot of savings if you’re working to buy a home, build an emergency savings account, or to retire.

When 90% of the products you carry are generics wearing your store’s label, it’s imperative to keep the best possible products on the shelves.

Who competed

In determining which retailer offers the best selection of high-quality generics, we looked at these large retailers and the store-label brands they’re famous for:

Costco: Kirkland SignatureSam’s Club: Member’s MarkSafeway: Safeway SelectKroger: Simple TruthTarget: Up & UpWalmart: Equate

Each retailer has a good selection of generic products. Undoubtedly, regular shoppers will discover their favorites, and perhaps that’s the point. As a growing number of people find that they prefer the generic over a name brand, it becomes increasingly clear that spending money on fancy packaging is a goofy way to drain one’s bank account.

Hiding in plain sight

It may be the worst-kept secret in business that generic products are not always produced by small, barely-on-the-radar manufacturers. Here’s a small sample of the companies that produce products for retailers to put their own store labels on:

StarbucksDuracellReynoldsTownsend FarmsKeurigJelly BellyBumble BeeKimberly ClarkBolthouse FarmsStearns & FosterOcean SprayCooperVisionBlommer Chocolate

The arrangement makes sense. It pulls extra cash into the manufacturer’s coffers and provides retailers with generic brands consumers already enjoy.

If you’re looking to save money on everyday items and are willing to take a chance on generics, trying unfamiliar products could be fun. If nothing else, you may find a few new favorites.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Dana George has positions in Target and Walmart. The Motley Fool has positions in and recommends Costco Wholesale, Starbucks, Target, and Walmart. The Motley Fool recommends the following options: short April 2023 $100 calls on Starbucks. The Motley Fool has a disclosure policy.

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