In June of 2013, Bankrate.com released a consumer survey in which 3/4 of the respondents stated they lived paycheck to paycheck. With soaring housing and transportation costs and stagnant salaries, setting aside cash for unexpected expenses is impossible for the majority of Americans.
If the same survey were to be conducted today, the results would be the same: saving for extra expenses is nearly impossible once basic monthly expenses have been paid for. If one of those extra expenses includes tax debt, you may be able to file for a financial hardship exception with the IRS. Here is a brief overview of how that process works:
If the tax debt is tied to your personal taxes, you will need to complete form 433-A, which is available on the IRS website. If the tax debt is for business-related taxes, you will need to complete form 433-B.
The IRS will need to make an informed decision regarding your case, and in doing so, will need a good deal of information. They’ll want the following information regarding your employment, for example:
- Job title and/or duties
- Full contact information for your employer(s)
- Length of time at each current job
- Copy of paystubs verifying employment income
Next, you’ll need to provide the following household information:
- Number of qualifying dependents
- Full address and contact information
- Type of house you live in: apartment, single-family home, multi-family (duplex or similar), manufactured home.
No IRS form is complete without reams of supporting documentation. Here are some of the items you’ll need to provide:
- Bank statements with complete banking information
- Documentation for any other income such as child support, pensions, social security, disability, investments, and interest
- Copies of statements for rent/mortgage, utilities, medical bills, transportation, food expenses, and other personal expenses you may have
- Finally, you will also need to provide a copy of your tax returns from the prior tax year
It is vital that the forms be filled out accurately. Any missing or incorrect information will result in delays processing your case, or your application being rejected altogether. Print out a form and complete it as a rough draft and read and re-read it to make sure you provided all the needed information and supporting documentation.
Get Help From a Pro
When faced with having to file for a financial hardship exception with the IRS, most people would rather have a tax pro help them through this process. IRS proceedings can be intimidating to the average person, but for a qualified tax pro, they’re a matter of business as usual; it’s what they do for a living. A good tax advisor can assist you in filling out the forms as well as answering any questions you may have.
Your tax pro can also negotiate with the IRS on your behalf, and for many people, that alone is well worth the cost.
Living paycheck to paycheck is the norm for the majority of Americans. Facing an additional debt in the form of taxes is beyond reach on a tight budget. You can file for a financial hardship exception by completing either form 433-A for individuals for 433-B for businesses. Gather all the needed documentation and complete the form accurately.
A good tax pro can walk you through the process, so don’t go it alone. We have tax pros on staff that can help you in times of financial hardship, and help you untangle the complex web of IRS tax codes and regulations. Give us a call or click on the white “Start Chat” button on any of our webpages, and we’ll be glad to help.