Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals)
How to Complete This Form and When to Use It
If you apply for a partial payment installment agreement (PPIA), the IRS will require you to complete Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals). This six-page form collects very detailed information about your financial situation. The IRS uses this information to determine your eligibility for programs that let you settle your tax liability for less than you owe.
To increase your chances of acceptance, you need to fill out this form carefully and accurately. We can help guide you through the process. To get help filing Form 433-A, contact us today.
What Is Form 433-A?
Form 433-A is a collection information statement for wage earners and self-employed individuals. This form provides the IRS with a complete overview of your financial situation by gathering details about your assets, liabilities, income, and expenses. This information allows the IRS to assess if you qualify for certain tax relief programs.
Who Should Complete Form 433-F?
Typically, taxpayers complete Form 433-F in the following situations:
- When applying for a partial payment installment agreement — With a PPIA, the IRS accepts monthly payments on your tax liability. It waives the remaining tax liability at the end of a payment plan.
- If the IRS is holding you responsible for a Trust Fund Recovery Penalty — These penalties are related to unpaid employment taxes.
- In other cases where the IRS wants a detailed look at your financial situation to determine your eligibility for tax relief.
If you apply for a tax relief program that requires Form 433-A, the program’s instructions will let you know that you need to file Form 433-A. Otherwise, the IRS will notify you if it needs this form.
How to Complete Form 433-A.
Everyone needs to fill out the first five sections. Only self-employed people need to fill out sections six and seven. Here are tips on how to complete each section of Form 433-A.
Form 433-A Section 1 (Personal Information)
Section 1 of this form is very straightforward. You simply need to include your name, Social Security Number (SSN), date of birth, address, phone number, and marital status. If you have a spouse, include their name, SSN, and date of birth as well. Include your and your spouse’s driver’s license number and state. Then, list your dependents.
Form 433-A Section 2 (Employment Information for Wage Earners)
If you have an employer, you should include the following details in this section:
- Employer name.
- Address and phone number.
- If the employer allows contact at work.
- How long you’ve been with the employer.
- Your occupation.
- The withholding allowances on your W4.
- How often you’re paid.
If relevant, you should also include the same details for your spouse. If your unpaid tax liability was due to not withholding enough tax from your paycheck, you might want to adjust your withholding by providing your employer with an updated W4 before you file this form.
Typically, the IRS is more likely to approve your requests if you are taking care of the issue. If you fail to adjust your withholding or address other issues that lead to the delinquency, the IRS will be less likely to work with you.
Form 433-A Section 3 (Other Financial Information)
This section asks questions about various issues that affect your current and past financial situation. In particular, you need to answer the following questions and provide some follow-up details.
- Are you a party to a lawsuit?
- Have you ever filed for bankruptcy?
- Have you lived outside of the United States for six months or longer in the past ten years?
- Are you the beneficiary of a trust, estate, or life insurance policy?
- Are you a trustee, fiduciary, or contributor of a trust?
- Do you have a safe deposit box?
- Have you transferred assets for less than their full value in the past ten years?
Once you answer these questions, find supporting financial documents and attach them to the form.
Form 433-A Section 4 (Personal Asset Information)
Section four is the longest and one of the most important parts of Form 433-A. It takes up two pages, which is a third of the form. This section needs to include very detailed information about your assets. Make sure to include everything. You can’t hide assets from the IRS, and you shouldn’t try to. Here is what you need to include in section four.
List all bank accounts, including money market accounts, savings accounts, online accounts such as PayPal accounts, and stored value cards such as government benefit cards. Include the type of account, the name of the financial institution, the account number, and the balance. Make sure to include all of your accounts, even if they don’t have a balance.
In the investments section, you should include information about stocks, bonds, mutual funds, certificates of deposit (CD), and retirement accounts. List the type of account, the name and address of the financial institution, their current value, and any loans you have against them. Then, calculate their equity, which is the difference between their current value and any loans against them.
You also need to reveal any virtual currency that you own. List the name of the wallet or exchange, the email address used when you set up your account, and the location of the virtual currency, such as a virtual wallet or an external hard drive. Finally, enter the currency’s value as of the date you complete the form.
If you have an interest in a business, you should also include that in this section. For instance, if you own shares or have an ownership interest in a family business, you need to list that in the assets section.
The IRS also wants to know about any available credit you have. This includes lines of credit and credit cards. You need to list the account numbers, credit limits, and amount owed. Then, you need to add up the available credit from your cards and enter the total. If you can pay off your tax liability with a credit card, the IRS may require you to do so.
Cash Value in Life Insurance
If you have any cash value in life insurance, you also need to include that in section four. You do not have to list term life insurance policies in this section since they do not have cash value. Generally, this only applies to certain whole life insurance plans. Include the policy number, owner, current cash value, and any outstanding loan balances.
In the real property section, you should include a description of your real property, its purchase price, loan balance, monthly payment, and date of final payment. Then, include information about the lender.
You also need to note the property’s fair market value and equity. Fair market value is the price you would get if you sold the property today. To calculate equity, simply subtract the property’s loan balance from its fair market value. For instance, if it’s worth $300,000 and the loan is for $250,000, the equity is $50,000.
The IRS wants to know the year, make/model, mileage, license plate number, and VIN of your personal vehicles. This includes cars but also boats, RVs, motorcycles, trailers, off-road vehicles, and similar assets. If you owe money on these assets, you need to include details about the lender.
In the personal assets section, you should include all tangible and intangible assets. This includes everything from antiques to gun collections to domain names. Again, you need to list the asset’s purchase date, current value, loan balance, monthly payments, and equity. You should also include details about the lender.
Form 433-A Section 5 (Monthly Income and Expenses)
This is the final section for people who are traditional employees. If you are self-employed, you also need to complete sections six and seven, and you need to do them before you do this section.
This section details your monthly income and expenses. You should list all types of income, including wages, interest and dividends, net business income, net rental income, pensions, and Social Security payments. You also need to include child support and alimony as well as any other income sources.
When entering your wages, make sure to put in the gross amount before taxes and deductions. You will eventually include taxes and deductions in the expenses section. For instance, if insurance premiums come out of your paycheck, you will note your pay before the premiums are withheld, and then you will list the insurance payment in the expenses section.
For living expenses, you should detail food, clothing, housing, utilities, vehicle expenses, health insurance premiums, out-of-pocket healthcare costs, taxes, child care, debt repayments, and all other expenses. Then, you should note the IRS allowance next to the expense. The IRS has a set of allowances called Collection Financial Standards.
These standards detail how much the IRS believes you should be spending on various expenses based on where you live and the size of your household. Typically, if your expense exceeds the standard allowance, the IRS won’t let you claim it. For instance, the IRS believes a single person should only spend $431 per month on food. If you’re single and your food expense is over this threshold, the IRS won’t consider the excess amount to be necessary.
Form 433-A Section 6 (Business Information)
You only need to complete this section if your business is a sole proprietorship. If you have a partnership or a corporation, you should file Form 433-B (Collection Information Statement for Businesses) in addition to Form 433-A.
Sole proprietorships file a Schedule C, and this category can include everyone from freelancers to small business owners who have not elected to be taxed as corporations.
In section six, you need to list basic information about your business, including its EIN, address, and frequency of tax deposits. You also need to note if the business is a federal contractor, the number of employees, and your average gross monthly payroll. Then, you need to share details about your payment processing software, the credit cards the business accepts, total cash in bank accounts, accounts receivables, and business assets.
Form 433-A Section 7 (Sole Proprietorship Information)
In section seven, you create an overview of your business’s typical income and expenses. You can include details from a three, six, nine, or 12-month time period. You must include all gross receipts, gross rental income, interest or dividend income, and all other income. For expenses, you need to include materials, inventory, gross wages, rent, supplies, vehicle expenses, repairs and maintenance, insurance, and current taxes.
You should attach a profit-and-loss statement to Form 433-A, and these details should reconcile with the information on your P&L. If desired, you can use a copy of your Schedule C to back up the claims in this section. However, you will need to adjust the paperwork to account for double expenses. For instance, if you claim home office expenses on your Schedule C, you need to remove them because they should already be included in section five of this form.
Difference Between Form 433-A and 433-A (OIC)
Form 433-A and Form 433-A (OIC) are very similar. They are both collection information statements for wage earners and self-employed people. Form 433-A (OIC) requests about the same information as Form 433-A, but it is slightly longer and in a different order.
You need to complete Form 433-A (OIC) if you’re applying for an offer in compromise. A tax professional can help you determine when you should use each of these forms.
Form 433-A Versus Form 433-F
Just like the other 433-series forms, Form 433-F (Collection Information Statement) also collects detailed information about a taxpayer’s financial situation. This form, however, is only three pages long. The IRS may require Form 433-F if you want to set up a payment plan, but you owe over a certain threshold or can’t set up direct debit for the payments.
Where to Download Form 433-A
You can download Form 433-A from the IRS’s website. You can also use the link to the form at the top of this page. When downloading the form, you may want to double-check to ensure you’re using the latest version of the form. The IRS occasionally updates all of its forms.
Where to Mail Form 433-A
The address where you should submit this form varies based on where you live. In most cases, you will not be filing this form on its own, and you can find the address in the instructions of the other documents you’re submitting.
For instance, if you’re requesting a PPIA, you should check the instructions to see where to mail this form. If you’re submitting this form in response to an IRS request, the IRS notice should have the address you should use. Otherwise, consult with a tax professional.
Get Help With Form 433-A
Filing this form can be exhausting and confusing. However, you must present your financial situation in the right light if you want to qualify for certain IRS programs. For best results, you may want to work with a tax professional.
To get help with Form 433-A or to talk about other alternatives for your tax situation, contact us today. At The W Tax Group, we focus on helping our clients negotiate the best outcomes possible on their IRS and state tax concerns.