Thursday, November 6, 2008

Monthly Disposable Income

Did you know that Monthly Disposable Income is the determining value of how much the IRS will negotiate a payment for? The key is knowing what goes in to determining how much you can afford and what the IRS deems as a necessary living expense.

As a general rule, the IRS has standards for food, clothing,car payment,medical expenses. Say for instance, if one person lives in the household, the IRS standard for food,clothing is $507 with medical expense as $57, car payment would be around $489. The IRS also allows for a car maintenance standard but has to take in consideration the state/county one lives in.

When attempting a resolution with the IRS, a taxpayer will have to provide full financial disclosure (of liability exceeds $25,000) including but not limited to utilities, mortgage payments, car payments, other secured debt, medical payments, and car insurance. Other permissible expenses would need to be court ordered or secured by another financial institution.

Determining ones Monthly Disposable Income (MDI) means taking your income minus your expenses. If you have tax liability, it would behoove you to hire a professional to assess what your best possible outcome by determining your MDI. There are so many factors to take into consideration (while determining this MDI) that the average taxpayer is not inclined to know.

There are tax professionals in a growing industry that can help you today !

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