IRS Form 433-F: How to Navigate the Financial Statement for Individuals?
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Dealing with outstanding federal tax liabilities can be a painstakingly long and complicated process. Depending on the circumstances, completing IRS Form 433-F is sometimes a part of that process, so familiarity with it might make settling a tax debt easier.
The form’s official title, Collection Information Statement, indicates that its purpose is to gather the information the IRS can use to determine if taxpayers can pay the amount they owe.
However, Form 433-F is one of many forms from the 433 series, so determining the proper context to use it can be challenging for most taxpayers. We’ll walk you through the steps you must take to fill out this form and help you navigate the financial statement for individuals.
Table of Contents
Understanding the Purpose of IRS Form 433-F
This two-page document collects the taxpayer’s financial information to determine their ability to settle an outstanding tax liability.
Hence, the IRS may require you to submit this form when applying for the currently not collectible status or an installment agreement. The information you must provide on this form ranges from your and your spouse’s personal data to your family’s living expenses.
You should only use this form when instructed by the IRS because you may have to submit other documents that serve a similar purpose depending on the amount you owe and other factors.
Familiarity with the IRS Collection Financial Standards, both national and regional, is vital when filling out this form because you’ll have to rely on these standards to determine the appropriate food, housing, and other expenses.
That’s why hiring a tax professional who can help you fill out this form correctly can increase your chances of obtaining the currently not collectible status or entering into an installment agreement.
The Most Common Applications of IRS Form 433-F
Whether or not you’ll have to file Form 433-F often depends on the amount you owe. For example, you’re not required to submit this form to the IRS if your tax debt is under $25,000.
Moreover, taxpayers eligible to apply for a payment plan online can skip filling out this form. Let’s go through some of the situations when submitting a financial statement to the IRS is mandatory.
Applying for the Currently Not Collectible Status
As noted earlier, all taxpayers who apply for the Currently Not Collectible status must file Form 433-F.
When applying for an offer in compromise, individual taxpayers must fill out Form 433-A (OIC). That’s why it’s paramount to consult with the IRS officer assigned to your case and your tax attorney to determine which 433 series form you should submit.
To qualify for the currently not collectible status, taxpayers must provide a financial statement showing they have no assets the IRS can collect.
The Form 433-F might also be used when determining financial hardship caused by wage or social security garnishment, bank account levy, and other collection actions.
Payment Plans for Outstanding Debts
Taxpayers who owe more than $100,000 to the IRS must file a financial statement that lists all of their sources of income and assets. You may also have to file Form 433-F if your tax liability exceeds the $50,000 mark and you want to avoid making payments from your bank account.
However, filing this form is optional if the initial downpayment pushes you below the $50,000 threshold.
Sometimes, taxpayers with tax liabilities ranging from $25,000 to $50,000 must fill out this form if they don’t agree to set up the direct debit payments on their installment agreement.
Optionally, you can use the Payroll Deduction Agreement if you want your employer to withhold monthly installment agreement payments from your wages and send them directly to the IRS.
In this case, you’ll have to file Form 2159 instead of Form 433-F but bear in mind that the IRS charges a fee for filing this form.
Filling Out Form 433-F
Being honest and transparent about your financial situation is vital when filling out Form 433-F because the IRS considers concealing information about your assets a tax fraud and may opt to press criminal charges.
The form contains eight sections tiled alphabetically, and you should skip sections that collect financial information about businesses when filing the financial statement as an individual taxpayer.
You should enter your private data, such as your and your spouse’s names, SSNs, ITINs, contact details, and the number of dependents you claimed on the most recent tax return, in the form’s top section.
Here’s the overview of the information you should include in each of the form’s sections.
Accounts and Lines of Credit
The section’s title is self-explanatory. You should list all bank accounts, IRA, 401k, or other investments and cryptocurrencies you hold.
You’re also required to provide additional information, such as the institution’s name, account number, or the name of the virtual currency wallet.
Real Estate
Your financial statement should contain all your real estate, including your primary home, rental properties, and vacation houses. You’ll have to provide a purchase date for each property, purchase prices, current value, the amount you owe, and the equity.
Other Assets
Section C collects information about boats, RVs, paintings, or any other valuable assets that can be used to pay back tax debt.
It would help if you briefly described each asset, indicate when you purchased it, and calculate its equity by subtracting the amount you owe for it from its fair market value.
Credit Cards
Provide information regarding the credit card type, credit limit, balance owed, and minimum monthly payment for each credit card you have. Don’t omit cards on which you don’t have an outstanding balance.
Business Information
Skip this section if you’re filling out Form 433-F as an individual taxpayer.
Employment Information
Filling out this section is optional if you attach a copy of your most recent pay stub to the form.
Suppose you cannot send a copy of your pay stub with Form 433-F. In that case, you must provide information about your current employer(s), payment frequency, withholding amounts for local, state, and federal taxes, and the duration of your employment in this section.
Taxpayers who file joint returns should add the same information for their spouses.
Non-Wage Household Income
Alimony, child support, self-employment, rental, or social security income are only a few examples of non-wage household income you must list on Form 433-F.
Please check the form’s Instructions section for more information about the types of monthly income that should be included in this section. Prepare a copy of your current year’s profit and loss statement and send it with the form.
Monthly Necessary Living Expenses
The form’s final section is the trickiest to complete. It contains five subsections, food/personal care, transportation, housing & utilities, medical and other.
It would help to base your expense estimations on national and local financial standards. However, remember that the IRS might reject your application if they determine that your expenses exceed the limits imposed by the allowable expenses.
Allowable expenses for housing and food are low, so you can easily exceed them if you’re not careful. Consulting a tax professional will ensure you stay under the allowable expense limits and increase your chances of having your application approved.
Filing Form 433-F
Please read the form carefully and double-check the validity of the information before sending it to the IRS. Ensure you have copies of paycheck stubs, profit and loss statements, and any other documents you must attach to the form.
If you’re applying for a payment plan, you must fill out Form 9465 Installment Agreement Request and submit it with Form 433-F.
Once you have all the necessary documents, you should find the correct mailing address, usually the same address provided in Form 9465’s or Form 1040’s instructions.
E-filers can fill out the form’s digital version and submit it to the IRS through their online accounts.
Frequently Asked Questions
Taxpayers who have already entered an installment agreement but cannot pay off their debt within 72 months must file this form with the IRS.
According to the national standards in 2023, the maximum allowable expense for food for a single person is $466, while a three-person family cannot claim more than $936 for their food expenses on Form 433-F.
The form must only contain the monthly amounts you spend on your expenses. You must divide the amount you pay for quarterly bills by three to get the appropriate monthly sum or multiply a weekly bill’s amount by 4.3 to compute how much that bill costs you monthly.
You must use an additional sheet if a section of this form is too small to fit all the information you need to include.
Using Form 433-F to Navigate Financial Statements and Clear Tax Debts
Putting together a financial statement is one of the steps you may have to take to settle a tax liability. However, the IRS only requests Form 433-F under specific circumstances, so you must check whether filing this form is necessary.
The two-page form collects information about your income, assets, and general financial situation to help the IRS determine your eligibility for an installment agreement or currently not collectible status. Hence, all the information you provide in this document must be accurate.
Author:
Logan is a practicing CPA and founder of Choice Tax Relief and Money Done Right. After spending nearly a decade in the corporate world helping big businesses save money, he launched his blog with the goal of helping everyday Americans earn, save, and invest more money. Learn more about Logan.
