Book Appointment
Logo Dreis Tax Services in Spokane
Payment Link
Client Login
Logo Dreis Tax Services in Spokane
Book Appointment
Client Login
Payment Link
Client Login
Book Appointment
How to Apply for Hardship Status with the IRS A Step-by-Step Guide

How to Apply for Hardship Status with the IRS: A Step-by-Step Guide

Financial hardship can strike anyone, and when it impacts your ability to pay taxes, the situation can feel overwhelming. The IRS recognizes such circumstances through its provision for applying for hardship status. This status can provide relief to taxpayers by postponing collection actions. This guide offers a step-by-step approach for Washington residents on how to navigate this process, aiming to alleviate some of the stress associated with financial difficulties and tax obligations.

Understanding Hardship Status

Hardship status, officially known as “Currently Not Collectible” (CNC) status, is granted when the IRS determines a taxpayer cannot afford to pay their tax debt without causing significant financial distress. Being placed in CNC status temporarily halts collection activities such as levies and garnishments.

Step 1: Assess Your Situation

Before applying, it’s crucial to understand your financial situation thoroughly. Compile a detailed list of your income, expenses, assets, and liabilities. This information will be vital in proving your inability to pay.

Step 2: Gather Documentation

Documentation is key to demonstrating your financial hardship to the IRS. This includes, but is not limited to, bank statements, pay stubs, bills, and other records of your financial obligations and resources.

Step 3: Fill Out the Necessary Forms

The primary form used to request hardship status is the IRS Form 433-A (for individuals) or Form 433-B (for businesses). These forms require comprehensive financial information, so take care to fill them out accurately.

Step 4: Submit Your Application

Once you’ve completed the forms and gathered your documentation, submit your application to the IRS. This can typically be done by mail or, in some cases, over the phone or online.

Step 5: Communicate with the IRS

After submission, be prepared for possible follow-up questions or requests for additional information. Maintaining open lines of communication with the IRS can facilitate the review process.

Step 6: Await the IRS Decision

The IRS will review your application and make a determination. If granted hardship status, you will be notified, and collection activities will be suspended for a specified period.

Maintaining Compliance

Being granted hardship status does not erase your tax debt; it merely postpones collection efforts. It’s essential to use this time to improve your financial situation. Additionally, you must continue to file all required tax returns on time and pay any taxes due for new income.

Conclusion

Applying for hardship status with the IRS can provide crucial breathing room for those in financial distress, allowing them to focus on regaining financial stability without the immediate pressure of tax debt collection efforts. By following these steps and staying informed about your rights and responsibilities, Washington residents can navigate the complexities of tax hardship with greater confidence and clarity.

Remember: Hardship status is a temporary solution. Working towards resolving your tax obligations and seeking professional advice can help you navigate your long-term financial health and tax compliance.

Logod2-1
Facebook Instagram Linkedin Twitter
enrolled-agent-spokane
NAEA-logo-web

Explore

Contact Info

Westplains chamber of commerce

© Dreis Accounting Services – Powered by

website-designer-seattle-wa