Allowable Expenses

If you experience tax debt and you have either hired someone to take care of this burden for you, or you have elected to take on the IRS yourself, the allowable expenses are still the same. The IRS has standards for the following:

Car payment- $489
Maintenance- depends on the state, county you live in
Housing-depends on the state,county,number in the household
Out of pocket health cost- for one individual under 65 is $60

Taxpayers have difficulty understanding these allowable and unallowable expenses in resolution. One would think that a child's tuition would be allowed but, the IRS feels that students should take the opportunity to apply for school loans; this is not deemed as an allowable expense.

Child care, if not paid to a business or an individual that reflects this as income on their tax return, is not considered allowable either. I recently had a client that revealed he paid his mother in law $1000/month in childcare. However, considering this was "under the table" cash, and not reported on her return as income, consequently increased his income.

Income and expenses are what determine your Monthly Disposable Income (MDI). The more disallowed epenses, the higher your MDI. If you have tax debt, and you are taken it upon yourself to try and resolve this debt, you need to make yourself aware of IRS standards and what they will consider a "necessary living expense". Bare in mind, this is difficult to do.

If you have tax liability, and you are reluctant to act on your behalf, contact a tax resolution specialist today. There are specialist out there that have many years of service with the IRS and know the Internal Revenue Manual and how to negotiate a more favorable outcome.