How to Fill Out IRS Form 433-D Installment Agreement Request

Updated on February 6, 2024

At a Glance

  • IRS Form 433-D is used to request a monthly installment plan for paying off tax debt.
  • The form requires detailed information about your income, expenses, assets, and liabilities.
  • If some of the tax debt is from a business, additional information about the business’s finances is required.
  • It’s important to provide accurate information and documentation, and to keep the IRS updated about any changes in your financial situation.

Form 433-D is used to request an installment agreement with the IRS to pay off outstanding tax debt over time. The form details your financial situation to determine an affordable monthly payment plan. Successfully completing this important form is necessary for the IRS to approve a manageable tax debt payment schedule.

Reasons for Using Form 433-D

You would need to fill out Form 433-D if:

  • You owe $25,000 or less in back taxes
  • You cannot pay your full tax debt immediately
  • You need a monthly installment plan spread over several years
  • You expect to owe taxes in the current year as well

The form lets you provide details on income, expenses, assets, and liabilities so the IRS can calculate an affordable installment amount.

Steps to Prepare Form 433-D

Before completing Form 433-D, make sure you:

  • Verify the total unpaid tax debt amount you owe
  • Gather personal financial statements showing income from all sources
  • Document housing, vehicle, and other monthly expense costs
  • List all current asset and liability account balances

Having these records handy will make filling out the form easier and more accurate.

Completing Basic Information Sections

The top sections of Form 433-D ask for your personal details, the kind of tax debt owed, preferred payment method, ability to make income tax deposits, and whether you have filed all required returns.

Fill in your name/address, social security number, Employer Identification Number if business-related, and contact information completely. Specify if the owed taxes are individual Form 1040 taxes or business taxes.

Then provide details on if you want payments directly debited from a bank account, if your income situation allows you to continue making tax deposits for current year tax liability, and whether you are compliant on filing business/individual returns.

Documenting Overall Financial Condition

Page 1 of Form 433-D focuses on your personal and household financial circumstances. This includes:

  • Monthly income from all sources (wages, Social Security, rental income, etc.)
  • Regular monthly expenses broken down into categories like housing, food, health care costs, taxes, etc.
  • Current total balances of cash assets like bank account holdings
  • Investment asset current values (stocks, bonds, retirement accounts, cryptocurrency)
  • Equity values of personal assets (real estate, vehicles, other property)

Providing accurate figures in each section gives the IRS an overview of income that can be directed to installment payments versus fixed costs tied up in assets that have accumulated equity over time.

Business Financial Information

Page 2 is only required if some portion of the taxes owed are from a business you operate. This parallel section captures the same expense, income, asset, and liability snapshot – but focused on current finances tied directly to running your company.

Having both personal and business financial data documented allows the IRS to see your full economic picture when proposing an acceptable installment payment amount.

For self-employed taxpayers or small business owners, this section is just as important as page 1 in requesting a successful payment plan schedule.

Explaining Special Circumstances

If your expenses in certain categories seem unusually high or assets/income lower than typical, Form 433-D provides space for explanations or statements with each section.

For example, you can provide added context on exceptional medical bills if your health costs are above norms. Or if income dropped dramatically due to job loss or disability in the past year.

The narrative portions allow you to document why your financials show a given status – which could influence the acceptance of a payment plan fitting your situation.

Attaching Required Documentation

Along with fully completing Form 433-D, documentation that supports the income, expenses, asset valuation, and liabilities reported is required.

This includes recent pay stubs, bank/investment statements, unpaid medical bills, credit card statements showing balances, mortgage statements with home value and loan terms, retirement account balances, etc.

Providing back up validation with your Form 433-D submission substantiates the financial data used to determine affordable installment payment levels.

Mailing Form 433-D to the IRS

You should mail the completed Form 433-D and attachments to the specific IRS office that contacted you regarding the tax debt repayment. Often this is your closest local IRS processing location. The IRS correspondence you received likely lists the appropriate office.

Make copies of the full Form 433-D submitted for your records as well.

After Receiving IRS Reply on Payment Plan Options

The IRS will review your financial submission on Form 433-D and either accept, modify, request more data, or possibly reject your installment payment capacity if income/equity is too high or tax issues unresolved.

If proposed payment schedule terms are agreed upon, you must stick to regularly meeting them each month. Defaulting can still trigger IRS enforcement actions to recover unpaid taxes. Set calendar reminders for each installment due to avoid issues.

Following up Promptly if Tax Debt Worsens

If your financial situation deteriorates after initially setting installment terms, contact the IRS immediately to explore adjusting payment amounts. Remaining transparent on inability to continue accepted terms is key.

Use Form 433-D any time outstanding tax obligations recur to set new cooperative payoff plans with the agency.

Final Thoughts

Navigating the complexities of tax debt can be challenging, but Form 433-D offers a structured way to manage repayments over time. By thoroughly documenting your financial situation, negotiating a realistic payment plan, and maintaining communication with the IRS, you can mitigate the stress associated with tax debt. Always ensure your financial details are up-to-date and accurately reflected in your submission to foster a smoother approval process and maintain a good standing with the IRS.

Frequently Asked Questions (FAQ)

What is IRS Form 433-D?

IRS Form 433-D is a document you submit when you want to establish an installment agreement with the IRS to pay off outstanding tax debt over time.

Who should use Form 433-D?

You should use Form 433-D if you owe $25,000 or less in back taxes, cannot pay your full tax debt immediately, need a monthly installment plan spread over several years, or expect to owe taxes in the current year as well.

What information is needed to complete Form 433-D?

You will need to provide details about your income, expenses, assets, and liabilities. This includes your personal details, the kind of tax debt owed, preferred payment method, and whether you have filed all required returns.

Is there a section for business financial information?

Yes, if some portion of the taxes owed are from a business you operate, you will need to fill out the business financial information section.

Can I explain special circumstances on Form 433-D?

Yes, Form 433-D provides space for explanations or statements with each section. You can provide added context on exceptional medical bills or if income dropped dramatically due to job loss or disability in the past year.

What kind of documentation is required with Form 433-D?

You will need to provide recent pay stubs, bank/investment statements, unpaid medical bills, credit card statements showing balances, mortgage statements with home value and loan terms, and retirement account balances.

Where do I mail Form 433-D?

You should mail the completed Form 433-D and attachments to the specific IRS office that contacted you regarding the tax debt repayment. Often this is your closest local IRS processing location.

What happens after I submit Form 433-D?

The IRS will review your financial submission on Form 433-D and either accept, modify, request more data, or possibly reject your installment payment capacity if income/equity is too high or tax issues unresolved.

What if my financial situation worsens after setting installment terms?

If your financial situation deteriorates after initially setting installment terms, contact the IRS immediately to explore adjusting payment amounts. Remaining transparent on inability to continue accepted terms is key.

Can I use Form 433-D more than once?

Yes, you can use Form 433-D any time outstanding tax obligations recur to set new cooperative payoff plans with the agency.

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Frank Gogol

I’m a firm believer that information is the key to financial freedom. On the Stilt Blog, I write about the complex topics — like finance, immigration, and technology — to help immigrants make the most of their lives in the U.S. Our content and brand have been featured in Forbes, TechCrunch, VentureBeat, and more.