Los Angeles Tax Relief Types and Examples

Los Angeles tax relief is a process of minimizing the burden of tax liabilities. This is often accomplished by utilizing various types of tax deductions, credits, and exclusions to reduce the amount of taxes paid.

A tax relief attorney can also help minimize problems resulting from unpaid taxes, such as interest, penalties, and the loss of assets. They have the knowledge and experience to handle any tax relief matter.

Tax Abatement

A tax abatement is property tax relief offered by local governments or taxing agencies. These programs are designed to encourage the construction of new homes or businesses in areas with low demand and lower property values and to stimulate affordable housing development for low-income residents.

The amount of tax reduction depends on several factors. For example, it can be a percentage of the property tax bill or phased in over time.

Another way a tax reduction can work is by giving a property owner a certain percentage of the total value they add to their building during renovations. This can be a great way to reduce the cost of ownership or make the building more energy efficient.

In addition to the amount of the tax reduction, a city or county should also set guidelines for its eligibility requirements. These should include minimum income levels and any time frames that must be met for the decrease to remain in place.

Tax Deductions

Deductions are one of the best ways to lower your tax bill. They reduce your taxable income by subtracting expenses from your gross earnings.

A deductible expense reduces your tax liability by a percentage that depends on your marginal tax rate. So, if you have an effective tax rate of 20%, a $1,000 deduction will reduce your taxable income by $200.

But if you need help determining which deductions are available or how to claim them on your taxes, contact an experienced Los Angeles tax relief company like the Hillhurst Tax Group for assistance. They will walk you through the entire process, identifying your tax relief issue and finding the right solution.

Tax Credits

Tax credits are tax relief that directly reduces your tax liability. These types of tax relief are more valuable than deductions because they do not depend on your tax rate and can save you more money in the long run.

They are also more beneficial to low-income taxpayers because they do not affect their eligibility for certain public benefits. These include Supplemental Security Income (SSI), Medicaid, Temporary Assistance for Needy Families (TANF), and public or subsidized housing.

Credit can be either nonrefundable or refundable. Refundable tax credits are more valuable because they can increase your refund amount.

Tax relief can benefit people in Los Angeles facing the challenges of high California state and federal income taxes and high debts due to penalties, interest, and losses of assets from levies or garnishments. Tax relief can be achieved through various programs, including the IRS Fresh Start Program, Offers in Compromise, Currently Not Collectible Status, Innocent Spouse Relief, and other tax penalty programs.

Tax Exemptions

Several types of tax exemptions reduce or eliminate the obligation to pay taxes. These exemptions can be for goods or services.

A typical example is the Homeowners Exemption Program, which reduces property taxes on homes and up to one acre of land owned and occupied by homeowners (and manufactured homes) as their primary residence.

This exemption can reduce your annual property tax bill by $7,000 (Art XIII Sec 3 of the CA Constitution, Rev & Tax 218). To claim this exemption, you must make a one-time filing with the county assessor on an appropriate property tax exemption claim form.

If you file too late to receive the total year-long exemption, you may receive a prorated reduction this year and the total amount in subsequent years. You should also pay the first installment of your next qualifying tax bill on time to avoid penalty and interest charges.