The financial information and documentation required by the IRS on IRS Form 433-A and other tax documents can generally be divided into the sections below.
Section 1: Liquid Assets
Bank Account information Investments and 401K items that need to be discounted by the penalties (early withdrawal) and taxes prior to listing. The typical reductions on an IRA or 401K for someone under 55.5 is 40%
Section 2: Real Property
Use the tax assessor’s value (tax bill) to determine fair market value. Then reduce the value by 20% to determine current value. (FMV x .80)
Section 3: Autos
Use the Kelly Blue Book value as the FMV for each auto. Then reduce the FMV by 20% to determine current value.
Section 4: Housing
It’s up to you to provide the actual cost of this expense.
Section 5: Transportation
Same as above.
Section 6: Health Care
This will include the expense for monthly premiums and all costs not covered by insurance.
Section 7: Income
This section includes all household income. List gross monthly income for all individuals living in the home. Calculate gross month income as follows:
- Weekly: Gross * 52/12
- Bi-Weekly: Gross * 26/12
- Bi-Monthly: Gross * 2
Section 8: Taxes
You’ll need the proper expense for future taxes. If you’re under withholding, change your W?4 to the proper status. (i.e.: married 9 to single 0) If the proper withholding figure is not available, multiply your gross income by 25%.
You can also estimate monthly tax expense by taking the previous year’s tax (from the return) and divide by 12.
Section 9: Actual Expenses
List all of your actual expenses For example; a second mortgage should be listed under secured loans.
Section 10: IRS National Standards
Use the IRS National Standards to populate the following fields:
- Food, Clothing, Misc
- Housing and Utilities
- Vehicle Ownership Costs
- Vehicle Operation Costs
- Out of Pocket Health Care
With IRS Form 433-A completed, you’re on your way to resolving the debt owed to the IRS. The IRS will use the information you’ve provided and determine which of their programs and solutions you qualify for from there.