Life can be unpredictable, and sometimes these surprises can lead to financial difficulties. Recent data shows that 61% of Americans report recent price increases that have caused them financial hardship, up from 55%.
This might mean losing your job or facing a large tax bill that seems impossible to pay. If you’re among those struggling, there might be a way to ease your burden when dealing with the Internal Revenue Service (IRS).
IRS Form 433-A, also known as the Collection Information Statement for Wage Earners and Self-Employed Individuals, is a form that lets you demonstrate your financial challenges. In this post, we will explain everything you need to know about Form 433-A to help you understand how it can potentially provide some relief and 433A instructions.
What is Form 433-A?
IRS Form 433-A is used to give the IRS details about your finances, including your income, expenses, assets, and debts. This form is needed when the IRS requires financial information from you to figure out how you can settle your outstanding tax debts.
IRS Form 433-A is sometimes needed by self-employed individuals. It’s typically used when you’re trying to set up a payment plan with the IRS for your taxes due to financial difficulties. If you’re considering this route, Keith Jones Tax Relief can be your best option to give a call to. Here are a few options you might consider with their help:
- Installment Agreement (IA): If you’re dealing with unexpected financial issues, like a large medical bill, you can arrange to pay your tax debt over time with an installment agreement.
- Offer in Compromise (OIC): This option allows you to make an offer to the IRS to settle your tax debt for less than the full amount if you meet certain conditions. The IRS will look at your income, expenses, asset equity, and potential ability to pay to decide if they accept your offer. To apply, you need to fill out Form 433-A OIC.
- Currently Not Collectible (CNC) status: If you’re in a severe financial bind and keep getting collection notices from the IRS, you can apply to put these on hold by requesting Currently Not Collectible status. This means the IRS acknowledges you can’t afford to pay your taxes right now. They’ll stop sending collection letters until your financial situation improves, but you’ll still owe the taxes later when you can afford to pay.
These options can help manage your tax situation without adding too much stress during tough times.
What is Form 433-F?
IRS Form 433-F, also known as the Collection Information Statement, is a simplified version of the financial statement used by individuals to provide the IRS with information about their income, expenses, assets, and liabilities. It is typically used when the IRS needs to evaluate a taxpayer’s financial situation to determine payment options for outstanding tax liabilities.
What is the difference between 433-A and 433-F?
Form 433-F is a concise 2-page document used by a wide range of taxpayers to quickly provide basic financial information to the IRS. In contrast, Form 433-A is more comprehensive, designed specifically for wage earners and self-employed individuals who file a Schedule C. The main differences are:
- Length and Complexity: Form 433-A is more detailed, and used for complex tax resolution cases like Installment Agreements or Offers in Compromise. Form 433-F is shorter and simpler, making it ideal for straightforward financial assessments.
- Scope: Form 433-A requires a thorough disclosure of income, expenses, assets, and documentation, while Form 433-F provides a summarized overview, sufficient for less complex situations.
Who Should Complete Form 433A?
- Individuals who owe income taxes.
- Individuals who are responsible for paying a Trust Fund Recovery Penalty.
- Individuals who are personally liable for debts of a partnership.
- Owners of disregarded entities, such as a single-member LLC.
- Self-employed individuals or those who earn income from self-employment.
Who Should Complete Form 433-F?
- Ideal for those with overdue taxes looking to apply for Currently Not Collectible status or a payment plan.
- It is suitable if your tax case is managed through the IRS’s call center, Automated Collection System (ACS), which is focused on collecting past-due taxes.
Exclusions: Not needed if you owe less than $50,000 and are eligible for a streamlined installment agreement.
Note: If your tax matters are managed by a Revenue Officer, you will need to complete Form 433-A or Form 433-B instead
How to Complete Form 433-A?
IRS forms can be challenging to understand. To make it easier for you, we’ll guide you through IRS Form 433-A, explaining each section and the Form 433A instructions required. Below, you’ll find clear instructions on how to complete Form 433A.
Section 1: Personal Information
This section collects comprehensive personal information to help the IRS understand the taxpayer’s living situation and dependents, which may affect their financial capacity and tax obligations.
- Full Name of Taxpayer and Spouse (if applicable)
- Address (street, city, state, ZIP code, and country)
- County of Residence
- Home Phone number
- Cell Phone number
- Work Phone number
- Marital Status (Married or Unmarried/Single, Divorced, Widowed)
- Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
- Date of Birth
Additionally, it asks for information about:
- Other persons in the household claimed to be dependents (Name, Age, Relationship)
- Any outside business interests, including interest in an LLC, LLP, corporation, partnership, etc., along with the percentage of ownership
- Business name
- Type of business (select one option – Sole Proprietor, Partnership, LLC, Corporation, or Other)
Section 2: Employment Information for Wage Earners
The below employment details help establish the taxpayer’s ability to pay based on their employment stability, income frequency, and deductions that may affect disposable income.
For the Taxpayer:
- Employer Name
- Employer Address (street, city, state, ZIP code, and country)
- Work Telephone Number
- Whether the employer allows contact at work (Yes or No)
- How long have you been with this employer (in years and months)
- Occupation
- Number claimed as a dependent on Form 1040
- Pay Period (Weekly, Bi-weekly, Monthly, or Other)
For the Spouse:
- Employer Name
- Employer Address (street, city, state, ZIP code, and country)
- Work Telephone Number
- Whether the employer allows contact at work (Yes or No)
- How long have you been with this employer (in years and months)
- Occupation
- A number claimed as a dependent on Form 1040
- Pay Period (Weekly, Bi-weekly, Monthly, or Other)
Note: If you or your spouse have self-employment income instead of, or in addition to, wage income, complete Business Information in Sections 6 and 7.
Section 3: Other Financial Information (Attach copies of applicable documentation)
The goal of this section is to identify any additional financial obligations or assets that could impact the taxpayer’s overall financial situation, such as involvement in lawsuits or bankruptcy.
- Whether you are a party to a lawsuit (Yes or No)
If yes, provide the Location of Filing, Represented by, Docket/Case No., Amount of Suit, Possible Completion Date, and subject of the Suit - Whether you have ever filed bankruptcy (Yes or No)
If yes, provide Date Filed, Date Dismissed, Date Discharged, Petition No., and Location Filed - Whether you have lived outside of the U.S. for 6 months or longer in the past 10 years (Yes or No)
If yes, provide Dates lived abroad (from and to) - Whether you are the beneficiary of a trust, estate, or life insurance policy, including those located in foreign countries or jurisdictions (Yes or No)
If yes, provide the place where it was recorded, the name of the trust/estate/policy, the anticipated amount to be received, EIN, and when the amount will be received - Whether you are a trustee, fiduciary, or contributor of a trust (Yes or No)
If yes, provide the name of the trust (EIN). - Whether you have a safe deposit box (business or personal), including those located in foreign countries or jurisdictions (Yes or No)
If yes, provide location (name, address, and box number(s)), contents, and value. - Whether you have transferred any assets with a fair market value of more than $10,000, including real property, for less than their full value in the past 10 years (Yes or No)
If yes, provide List Asset(s), Value at Time of Transfer, Date Transferred, To Whom or Where was it Transferred
Section 4: Personal Asset Information for all Individuals (Foreign and Domestic).
In this section, taxpayers provide a snapshot of their personal assets, offering the IRS insight into their liquidity and net worth through the details of their bank accounts, investments, and property.
- Personal Bank Accounts (account number, account balance as of a specific date): Includes checking, savings, money market, and accounts in your or spouse’s name.
- Investments (stocks, bonds, mutual funds, etc.): List of name, current value, equity, and any loan details.
- Digital Assets (virtual currency, cryptocurrencies, non-fungible tokens, etc.): Type, the name used on the exchange, the email for the account, the locations of assets, and the current value.
- Total equity: Sum of bank accounts, investments, and digital assets.
- Available Credit (credit cards/lines): Name/address of the institution, credit limit, amount owed, and available credit.
- Life Insurance: Company name, policy numbers, current cash value, outstanding loan balance.
- Total Available Cash: Insurance cash value + available credit + total equity.
- Real property (homes, vacation properties): Description, purchase date, market value, current loan, equity.
- Personal Vehicles Leased/Purchased: Year, make/model, lease/loan company, purchase date, current value, loan balance, equity.
- Other Valuable Personal Assets: Description, purchase date, market value, loan balance, equity for art, jewelry, collectibles, antiques, etc.
- Total equity: Sum of real property, vehicles, and personal assets.
Section 5: Monthly Income and Expenses (Foreign and Domestic)
This part is designed to give a month-to-month overview of the taxpayer’s living costs and income streams, setting the stage for a realistic repayment plan by calculating the net monthly income.
Income Sources:
- List the gross monthly income for both the taxpayer and spouse from wages.
- Include income from dividends.
- Report net income from any businesses.
- Enter net rental income received.
- Add distributions from K-1s, IRAs, etc.
- Detail any pension received by both the taxpayer and spouse.
- Include Social Security income received by both the taxpayer and spouse.
- Report any received alimony or child support.
- Mention any other types of income, specifying the source.
Total Income: Sum all income lines to get the total monthly income.
Living Expenses:
- Record actual monthly expenses for food, clothing, and miscellaneous needs.
- List housing and utility costs, including rent or mortgage, insurance, and average utility payments.
- Include vehicle ownership costs, such as monthly car payments.
- Add up vehicle operating costs covering maintenance, fuel, and insurance.
- Enter public transportation costs, if applicable.
- Detail out-of-pocket health care costs, including medical services and supplies.
- If there are court-ordered payments, list those amounts.
- Mention life insurance premiums paid.
- For current-year taxes, include withheld or estimated tax payments.
- Note secured debts, providing details separately (attached list).
- Report any other expenses, again providing details separately (attached list).
Total Living Expenses: Sum all expense lines to calculate the total monthly living expenses.
Net Amount: Subtract total living expenses from total income to determine the net amount available each month.
Section 6: Business Information (Foreign and Domestic)
By detailing business structure and financials, this section helps the IRS assess the business’s health, its contribution to the taxpayer’s income and potential payment plans.
Business Profile:
- Indicate if your business is a sole proprietorship and whether it must complete Schedule C.
- Provide the business name and address if it’s different from your personal residence.
- List the Employer Identification Number (EIN) and type of business.
Business Operations:
- Share the business’s website address.
- Enter the total number of employees and the average gross monthly payroll.
- Mention the frequency of tax deposits.
- Note if the business accepts electronic payments and details any payment processors used.
Financial Details:
- For credit cards accepted by the business, provide the card names, merchant numbers, and issuing bank details.
Cash on Hand and Bank Accounts:
- State the total cash on hand for the business.
- For business bank accounts, including checking, savings, and any accounts not in a bank, list account types, financial institutions’ names and addresses, account numbers, and the current balance.
Receivables:
- Detail accounts and notes receivable, including e-payment accounts receivable and any amounts from online sales platforms.
- Provide the list of receivables, including who owes, for what, and how much, as well as the due date.
Outstanding Balance: Calculate the total outstanding balance of receivables.
Property Description: Provide details about each significant business asset, such as tools, machinery, or equipment.
Location: List where each asset is located, including street, city, state, ZIP code, and country.
Lender/Lessor Information: For any assets that are financed or leased, include the name, address, and phone number of the lender or lessor.
Value and Loans: State the current fair market value of each asset, the current loan balance against it, the amount of the monthly payment, and the date of the final payment.
Equity: Calculate the equity in each asset, which is the fair market value minus any loan balance.
Section 7: Sole Proprietorship Information
This section focuses on a sole proprietor’s business finances, offering a summary of the business’s monthly profitability and ongoing expenses, pivotal for understanding the taxpayer’s financial picture.
Monthly Income: Detail your monthly business income, including:
- Gross receipts from sales or services.
- Income from rental properties.
- Earnings from interest and dividends.
- Any other income not listed, with specifics provided.
Total Monthly Business Income: Sum up all income sources to calculate the total business income for the month.
Net Business Income: Subtract the total expenses from the total income to determine the net business income. If the business operates at a loss, indicate “0” for net income.
Notes:
- Include specifics on purchases and expenses that relate directly to the business and are essential for operation.
- Remember that personal expenses should be separated and not included in this calculation.
This section aims to provide a clear view of the financial performance of the business over the selected period, giving the IRS an understanding of the business’s profitability.
Note: Section 7 should be completed only if you are SELF-EMPLOYED.
End Note!
Completing IRS Form 433-A is a key step for individuals and businesses facing tax obligations and looking for relief through structured payment plans or compromises.
The high rate of electronic submissions, with 213.3 million tax forms filed online accounting for 78.6% of all filings, and a striking 90.7% of individual tax returns being submitted this way, underscores the efficiency and accessibility of handling tax matters digitally. This trend towards online filing simplifies the process, making it more manageable and faster for taxpayers to comply with IRS requirements.
However, the details required in Form 433A, which involve disclosing comprehensive financial information, can be complex. In this context, getting help from a tax professional can not only help you accurately complete and submit your forms but can also negotiate with the IRS on your behalf and navigate the electronic filing system effectively. Their expertise can be invaluable, especially in ensuring that you take advantage of all possible avenues to reduce your tax burden and set up a manageable payment plan.
Frequently Asked Questions
What is the difference between Form 433 A and 433-A (OIC)? Expand
Form 433-A is a collection information statement for wage earners and self-employed individuals. 433 A Form (OIC) is a specific version used when applying for an Offer in Compromise, which is an agreement with the IRS to settle your tax liabilities for less than the full amount owed.
How do Form 433-A and Form 433-F differ? Expand
Form 433-A is detailed and for self-employed individuals or wage earners with complex tax situations. Form 433-F is a shorter, more condensed collection information statement that may be used by a broader range of taxpayers.
Where should I mail Form 433 A? Expand
Keith Jones can determine the proper mailing address for you to send your completed Form 433-A to the appropriate IRS office based on your specific location and circumstances. With his expertise, he can provide you with the correct address to ensure the form reaches the right IRS office, rather than just guiding you.
Where can I download 433 A Form ? Expand
Keith Jones can find and provide you with the correct version of Form 433-A from the appropriate IRS resources. He can walk you through the process step-by-step to ensure you download and access the form accurately. You don’t have to worry about locating the right form.
How can I get help with Form 433-A? Expand
Keith Jones can provide personalized support to help you with Form 433 A. He can explain the details of the form, offer strategies for presenting your financial information favorably, and act as a liaison with the IRS to ease communication. You don’t have to worry about navigating the form alone.
What other services can Keith Jones provide besides helping with IRS Form 433-A? Expand
Keith Jones can provide IRS audit representation, serve as an IRS wage garnishment attorney, offer optimal tax relief solutions, and help resolve issues with back taxes. You don’t have to worry about handling these matters alone when utilizing his expertise.
