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Question

How does the 433Wrk: Collection Information Worksheet calculate?

Answer

The Collection Information Worksheet combines all information from the tax return and Screens 433 and 433-2 for use in the filing of a Form 433. It is also used to calculate the IRS Financial Standards based on the size of the Form 433 filer’s household, each person’s age, and their primary residence location by county.

If no data is entered for a Form 433 line item in the Household Income and Expenses data entry section of Screen 433, then the amount in the Household Monthly field will equal that of the Total Monthly column of the Household Income and Expenses Worksheet, if applicable. However, data entry on Screen 433 supersedes tax return data from the Household Income and Expenses Worksheet to report the Household Monthly column with the most up-to-date information possible. In certain expense categories (such as Food, clothing, and misc., Public transportation, and Out-of-pocket health care), if there is no data from either the Household Income and Expenses Worksheet or Screen 433, information from the IRS Standard: Household Maximum column will be duplicated.

Columns

IRS Standard: Household Maximum column

The IRS Standard: Household Maximum column computes standards as updated by www.irs.gov annually. Accurate data entry is required in the following fields on Screen 433 to calculate the standards correctly for the household:

• T, S, J: to determine if the taxpayer and/or spouse should be included in the filer’s household
• County of residence code: to determine in which county the filer’s primary residence is located
• Dependents: to determine which dependents should be included in the filer’s household and their current ages
• Vehicles: to determine the number of vehicles in the filer’s household, if any

The IRS Standard: Filer Maximum column is only calculated if the Form 433 filer is filing a joint Form 1040 but has a non-liable spouse for his or her delinquent tax debt obligations (i.e. Form 1040 filing status is married filing joint, but Form 433 is filed by taxpayer only). In such a scenario, UltraTax 1040 calculates the IRS Financial Standards for the Form 433 filer, as if he or she alone was the entire household, as seen in IRM 5.15.1.4.4.

Allocation column

The Allocation column is only calculated if the Form 433 filer is filing a joint Form 1040 but has a non-liable spouse for his or her delinquent tax debt obligations (i.e. Form 1040 filing status is married filing joint, but Form 433 is filed by taxpayer only). In such a scenario, UltraTax 1040 calculates an allocation percentage based on the Total income in the Form 433 column divided by the Total income in the Household Monthly column. This percentage is then applied to amounts for each expense line item in the Household Monthly column, as seen in IRM 5.15.1.4.4, unless a different allocation percentage is entered in that expense’s corresponding statement on Screen 433.

Form 433 column

The Form 433 column uses the previous columns to display which amounts will move forward to the applicable Form 433-A, Form 433-A (OIC), or 433-F. Each form has some different classifications of income and expense items, and this column reflects those differences by printing statements for Wages and Other income.

If the IRS Standard: Filer Maximum and Allocation columns are not applicable, then the Form 433 column:

• displays the lesser of the IRS Standard: Household Maximum or Household Monthly column amounts for expenses in the Housing and utilities, Vehicle 1 and 2 ownership costs, and Vehicle operating cost categories;
• displays the IRS Standard: Household Maximum column amount in the Food, clothing, and misc., Public transportation, and Out-of-pocket health care categories;
• and displays the Household Monthly column amount for all other categories.

However, if the IRS Standard: Filer Maximum and Allocation columns are applicable, then the Form 433 column:

• displays the lesser of the IRS Standard: Filer Maximum or Allocation column amounts for expenses in the Housing and utilities, Vehicle 1 and 2 ownership costs, and Vehicle operating cost categories;
• displays the IRS Standard: Filer Maximum in the Food, clothing, and misc., Public transportation, and Out-of-pocket health care categories;
• and displays the Allocation column amount for all other categories, unless a different allocation percentage is entered in that expense’s corresponding statement on Screen 433.

Refer to the Form 433 being filed to see how each form displays the various types of income and expenses necessary as calculated on the Collection Information Worksheet.

Additional information

• IRS Collection Financial Standards
• IRS Collecting Process: Shared Expenses

Related topic: 1040-US: Forms 433, 433-A, 433-A (OIC), and 433-F; Form 656; 433Wrk FAQs

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