#IRSNationalStandards #installmentagreements #OfferinCompromise #bankruptcy
The IRS National Standards are a set of guidelines used to determine the minimum amount of money that a taxpayer must spend on certain living expenses in order to qualify for certain tax benefits. The standards are based on the Bureau of Labor Statistics' Consumer Expenditure Survey, and they are updated annually.
There are five different National Standards:
Food
Housekeeping supplies
Apparel and services
Personal care products and services
Miscellaneous
The National Standards for food, housekeeping supplies, apparel and services, and personal care products and services apply nationwide. The National Standard for miscellaneous expenses is used to cover any expenses that are not included in the other four standards.
The maximum allowances for monthly housing and utilities and transportation, known as the Local Standards, vary by location.
How are IRS National Standards used?
The IRS National Standards are used in a variety of tax situations, including:
Determining eligibility for installment agreements. If you owe the IRS money and you want to set up an installment agreement, you must be able to show that you can afford the monthly payments. The IRS will use your income and the National Standards to determine if you can afford the payments.
Determining eligibility for an Offer in Compromise. An Offer in Compromise is a settlement agreement that allows you to pay less than the full amount of your tax debt. The IRS will consider your income, expenses, and the National Standards when deciding whether to accept your offer.
Determining eligibility for bankruptcy. If you file for bankruptcy, the court will use the National Standards to determine how much money you have available to pay your creditors.
What if my expenses are more than the National Standards?
If your expenses are more than the National Standards, you may be able to claim a deviation. A deviation is an exception to the National Standards that allows you to claim a higher amount of expenses. To claim a deviation, you must provide documentation to show that your expenses are actually higher than the National Standards.
The IRS National Standards are a valuable tool for taxpayers who are trying to determine their eligibility for certain tax benefits. By understanding the National Standards, you can be better prepared to apply for installment agreements, Offers in Compromise, and bankruptcy.
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