What are Allowable Living Expenses?

What are Allowable Living Expenses?

Allowable living expenses are those such as food, clothing, transportation, shelter, basic personal care, etc. When you have a tax debt, the IRS cannot forcibly collect back taxes from you if it compromises your allowable living expenses. Subsequently, the IRS must leave you enough money to continue to pay for your basic necessities. Should you have questions regarding an allowable living expense, contact RMS Tax Consulting at (520) 448-3531 and speak with Enrolled Agent Richard Schickel for a free consultation.

To determine a taxpayer’s allowable living expenses, the IRS uses the National Standards chart. You can determine your allowable living expenses using the table below.

ExpenseOne PersonTwo PersonsThree PersonsFour Persons
  Food $315$588$660$821
  Housekeeping supplies$32$66$65$78
  Apparel & services$88$162$209$244
  Personal care products   and services$34$61$64$70
More than four personsAdditional Person’s Amount
For each additional person, add to four-person total allowance:$378

Source: IRS

National Standards

There are National Standards for:

  • Food, clothing, and other items – These include the five necessary expenses for food, housekeeping supplies, apparel and services, personal care products and services, and miscellaneous expenses. The standards are taken from the Bureau of Labor Statistics Consumer Expenditure Survey, which studies buying habits, income and household characteristics across the country.
  • Out-of-Pocket Health Care Expenses – These include expenses on medical services, prescription drugs, and medical supplies. The health care allowances are based on Medical Expenditure Panel Survey data. Out-of-pocket health care expenses can be included in allowable living expenses, in addition to the amount you spend on health insurance.
  • Housing and Utilities – Derived from the U.S. Census Bureau, American Community Survey, and BLS data, Housing and Utilities include mortgage or rent, property taxes, interest, insurance, maintenance, repairs, gas, electric, water, heating oil, garbage collection, residential telephone service, cell phone service, cable television, and internet service.
  • Transportation – The operating costs of a vehicle include maintenance, repairs, insurance, fuel, registration, inspections, parking, and tolls. The ownership costs provide maximum allowances for the lease or purchase of up to two automobiles, if it is seen as a necessary expense. Usually, a single taxpayer is allowed one automobile. You can claim the amount actually spent, or the standard, whichever is less.

Should you have a tax debt and need assistance in determining your allowable living expenses, contact RMS Tax Consulting at (520) 448-3531 and speak with Enrolled Agent Richard Schickel for a free consultation.

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