IRS Form 433-H Explained

IRS Form 433-H Explained

IRS Form 433-H, or Installment Agreement Request and Collection Information Statement, is one of the many IRS documents that allows taxpayers to request tax relief when they cannot reasonably afford to pay what they owe in taxes.

TABLE OF CONTENTS

What Is IRS Form 433-H?
What Is An Installment Agreement?
Can Taxpayers Be Approved For An Installment Agreement And Receive A Tax Refund?
Who Can Use IRS Form 433-H To Request An Installment Agreement?
Who Can Not Use IRS Form 433-H To Request An Installment Agreement?
Tips Regarding Tax Debt, Installment Agreements, and IRS Form 433-H
Instructions For Filling Out IRS Form 433-H

Key Takeaways:

  • IRS form 433-H is a document that wage-earning employees can fill out to request an installment agreement in the case that their tax debt exceeds $50,000 or cannot be paid within the next 72 months or 6 years.
  • IRS Form 433-H has two main parts that taxpayers must fill out so the IRS can accurately analyze their tax situation and determine if an installment agreement is an appropriate tax relief option for them: Part 1 – Installment Agreement Request, and Part 2 – Collection Information Statement.
  • If a taxpayer can make a large downpayment on their tax debt to reduce their tax liability below the $50,000 threshold, the process for having their installment agreement request approved may be streamlined, they may pay off their tax balance faster, and they can reduce the amount of interest and penalties that are charged on the unpaid balance.

What Is IRS Form 433-H?

IRS form 433-H is a document that wage-earning employees can fill out to request an installment agreement in the case that their tax debt exceeds $50,000 or cannot be paid within the next 72 months or 6 years. This tax form has two main parts that taxpayers must fill out so the IRS can accurately analyze their tax situation and determine if an installment agreement is an appropriate tax relief option for them: Part 1 – Installment Agreement Request, and Part 2 – Collection Information Statement.

What Is An Installment Agreement?

Installment agreements are a form of IRS tax relief that allows taxpayers to pay back their tax debt by submitting monthly payments instead of paying the balance in full.

While installment agreements can be helpful forms of tax relief that assist taxpayers in paying back their tax debts, it is important that taxpayers consider other payment options that may result in an overall lower financial burden for them, such as utilizing a bank loan or credit card allowance.

Can Taxpayers Be Approved For An Installment Agreement And Receive A Tax Refund?

If an employer withheld more taxes from an employee’s paycheck during the tax year resulting in an overpayment of taxes, the taxpayer may be eligible to receive a tax refund when they file their tax return. However, if the taxpayer has unpaid liabilities, this refund will be applied toward that debt and not issued to the taxpayer.

Who Can Use IRS Form 433-H To Request An Installment Agreement?

Here are some of the qualifications a taxpayer must have to be considered eligible to submit IRS form 433-H to request an installment agreement to resolve their outstanding tax liability:

  • The taxpayer must be a wage-earning employee.
  • The taxpayer cannot afford to pay their full tax balance in the next 72 months
  • The outstanding tax balance is greater than $50,000

Who Can Not Use IRS Form 433-H To Request An Installment Agreement?

Sometimes people are not eligible to request an installment agreement with the IRS using form 433-H and are more suited to pursuing an alternative tax relief approach. Here are some instances in which taxpayers should not request an installment agreement:

  • If the taxpayer could afford to pay their tax liability within the next 72 months, tax form 9465, Installment Agreement Request, is the more appropriate tax form. 
  • If their outstanding tax liability is less than $50,000, taxpayers should instead submit form 9465, Installment Agreement Request, to apply for tax help with the IRS.
  • If the taxpayer is self-employed, IRS Form 433-D is the correct form to request an installment agreement. 
  • If the taxpayer operates as a business, IRS Form 433-D should be used to request tax relief in the form of a payment plan.

Tips Regarding Tax Debt, Installment Agreements, and IRS Form 433-H

Here are some tips from the IRS about how to achieve the greatest tax savings involving tax debt, installment agreements, and IRS Form 433-H.

Making a large downpayment on your tax debt.

If your accumulated tax debt exceeds $50,000 but you have the financial stability to make a large downpayment that reduces your tax liability below the $50,000 threshold, the process for having your installment agreement request approved may be streamlined, you may pay off your tax balance faster, and you can reduce the amount of interest and penalties that are charged on the unpaid balance.

Requesting an installment agreement online, if eligible.

In the case that taxpayers are up to date in filing their federal income tax returns and owe less than $50,000 in taxes, penalties, and interest, they may be eligible to fill out the application to instate an installment agreement online.

Paying the tax liability within 120 days.

If the taxpayer is able to pay the full balance due within 120 days, there will be no user fees for this type of agreement. In this case, taxpayers may be able to set up an Online Payment Agreement (OPA).

Instructions For Filling Out IRS Form 433-H

Top Section

Within the first section of IRS Form 433-H, the taxpayer (and their spouse, if they file jointly) must report their personal information, including their full name, social security number (SSN) or individual taxpayer identification number, mailing address, telephone numbers, and dependent information.

Part 1: Installment Agreement Request

In Part 1 of IRS Form 433-H, individuals must include information about how much they owe in taxes, when the payment was due, the amount they can afford to pay each month, the date of the month they would like to pay, and the account and routing numbers of their bank accounts if they wish to set up direct deposit payments.

Part 2: Collection Information Statement

In Part 2 of IRS Form 433-H, Collection Information Statement, taxpayers must list all of their income and expenses so the IRS can determine their ability to pay their tax liability.

Section A: Accounts/ Lines of Credit

  • Account Information
  • Account Balances
  • Business Accounts
  • Bonds or Stocks

Section B: Real Estate

  • Home or Primary Residence
  • Insurance
  • Taxes
  • Home Owners Association Dues

Section C: Other Assets

  • Vehicles
  • Cars
  • Boats
  • Antiques
  • Whole Life Insurance Policies
  • Business Assets

Section D: Credit Cards

  • Credit Cards
  • Lines of Credit

Section E: Employment Information

  • Wage Information
  • Withholding Taxes
  • Payment Frequency
  • Employer Information

Section F: Non-Wage Household Income

  • Alimony Income
  • Child Support Income
  • Net Self-Employment Income
  • Net Rental Income
  • Unemployment Income
  • Pension Income
  • Interest/Dividends Income
  • Social Security Income

Section G: Monthly Necessary Living Expenses

  • Food / Personal Care
  • Transportation
  • Housing and Utilities
  • Medical
  • Estimated Tax Payments

If you need help requesting an installment agreement with the IRS, the tax professionals at Ideal Tax can help guide you through the process.

Click to rate this post!
[Total: 1 Average: 4]