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What Are the IRS Allowable Living Expenses?

IRS allowable living expenses are used to determine how much you should be able to pay each month in an IRS installment agreement. These expenses involve national standards as well as local standards for rent and other expenses.

2019 Allowable Living Expenses

Different spending categories have their own allowable amounts, based on the number of members in your household. In 2019, a single person can claim $727 per month for food, supplies and clothing, while two people could claim $1,288.

$55 each month is permitted for out-of-pocket medical expenses. If you are 65 are older, you can claim $114 for this amount.

Other amounts vary based on where you live. In Fulton County, Georgia, the housing and utility amount is $1,770 per month for a single person. 

What If Your Expenses Are Too High?

If your expenses exceed the allowable living expenses, you must provide proof to the IRS so they can verify your spending. Otherwise, your excess expenses may be disallowed.

The allowable living expenses also don’t always provide an accurate depiction of your financial situation. For example, the IRS may not want to give you any allowance for a monthly credit card debt payment. This could lead to unrealistic expectations and cause difficulty when requesting your payment plan.

Negotiating the Payment Plan

Fortunately, you have some options for negotiating a favorable payment plan, even if your expenses exceed the IRS standards. If you qualify for a streamlined installment agreement, the IRS generally doesn’t require detailed financial information. You can avoid submitting a Collection Information Statement and proof of your expenses.

Even if you don’t qualify for a streamlined agreement, the IRS will still be more flexible if you can pay your full tax debt within six years or by the Collection Statute Expiration Date. You may need to submit a Collection Information Statement, but you generally don’t need to provide proof of your reasonable expenses in these cases.

The IRS wants as much money as it can get from you each month, but there’s no benefit to a payment plan that the taxpayer can’t realistically afford. Contact a tax attorney if you need help requesting an IRS installment agreement that fits your budget.

The Gartzman Law Firm can help you with installment agreement negotiations and other IRS tax problems. Use our contact form to request a consultation with an Atlanta tax resolution attorney.