Financial Information
- Why is it important
- What is included
Why - Current financial information is used to determine your ability or inability to pay delinquent tax debts. It is used in 4 out of 6 options available. It is important to include all income and expenses, because the end result will reflect your ability to pay. Financial information does not only include income and expenses, creditors will also review assets and the equity. Making a list of all your income, expenses and assets with equity or completing Form 433-A, Collection Information Statement, can be very time saving when you call the IRS/FTB. Having this information and an idea of how much you can afford to pay, will allow you to spend less time on the phone and make for a very successful call.
What - Financial information also includes how many in the household, along with any additional income from others in the household. Depending on your income and expenses, you may be asked to provide proof of both to verify the amounts claimed. For example, a wage statement not only verifies income, but also deductions, and a mortgage statement will verify the monthly payment and loan balance. While you can review the standard expenses online, it is suggested that you take your time to ensure you include all expenses, from utilities to insurance to car expenses. There are some expenses that are not allowed, like tithing, credit cards (included in food/misc), student loans for children and personal loans.
When gathering your financial information, take the time to review each expense and take an average when needed, like with utilities. The more complete your list is, the more accurate your ability to pay will be. Remember, your tax debt not only includes taxes, but also penalties and interest, so the more you can pay the more you will save on penalties and interest. Full paying with a loan could save you a lot of penalties and interest. If you have questions, would like to attend one of our workshops or would like to review your financial information please call Collection Alternatives.