IRS Allowances

If you have talked to the IRS lately about your tax debt and you had to provide financial information, you were probably told about the IRS standard allowances for expenses. Follow the link to find out what these standards are. There are standard amounts for food and clothing, housing, transportation and health care expenses.

One important thing to remember as long as you do not have tax debt, what your standard of living is, is up to you. When you owe the IRS tax debt however, your allowable living standards are theirs to determine. While this may not seem fair, it is within their rights to make that determination.

There are instances in which they will allow your actual expenses rather than holding you to the standards. If you can full pay your liability in 5 years with the payment amount determine using your actual expenses, they may allow you these expenses. If not, they will hold you to the standards.

If you are attempting to qualify for the currently non collectible status, they will hold you to those standards as well. They will not allow you not make any payments on your taxes when your standard of living is above the national standards allowable.

Negotiating with the IRS on your financial data is complex and unless you are aware of the rules, you may end up paying a higher monthly payment than necessary. Contact an Enrolled Agent to work on your behalf. Or if you have questions, click on the tab to the left of this blog to have a tax consultant answer your questions about how an Enrolled Agent can help.