How Much Does the IRS Let Delinquent Taxpayers Live On?

Posted on Monday, March 04, 2019

The IRS uses "Collection Financial Standards" to help determine a taxpayer's ability to pay a delinquent tax liability. Allowable living expenses include those that meet the test of being necessary to provide for a taxpayer's (and his or her family's) health and welfare, as well as his or her ability to produce income.

The IRS allowable living standards are designed to incorporate necessary items including a category for out-of-pocket health care expenses and an allowance for cell phones.

Higher costs may be allowed by the IRS if a taxpayer can prove that these amounts are inadequate.

Here are four categories showing the basic amounts allowed by the IRS in calculating delinquent tax payment amounts (effective March 26, 2018):

1. Food, Clothing and Miscellaneous Items

National monthly standards have been established for five necessary expenses of food, housekeeping supplies, apparel and services, personal care products and services, and miscellaneous items.

Monthly Expense One Person Two Persons Three Persons Four Persons*
Food $334 $646 $742 $888
Housekeeping supplies $35 $64 $63 $75
Apparel/ services $89 $142 $185 $264
Personal care products/ services $38 $69 $71 $75
Miscellaneous $151 $281 $323 $392
Total $647 $1,202 $1,384 $1,694

* For each additional person, add $357 to the four-person total allowance

2. Health Care

National out-of-pocket health care standards have been established for out-of-pocket expenses including medical services, prescription drugs, medical supplies, eyeglasses, contact lenses, etc. This monthly amount is allowed per person in addition to what is paid for health insurance.
 

Age

Monthly Out-of-Pocket Health Costs

Under age 65

$52

65 and older

$114

3. Housing and Utilities

The monthly standards for housing and utilities are determined on a local basis. The amounts allowed for a particular area and family size cover a taxpayer's primary residence. They include mortgage or rent, property taxes, interest, insurance, maintenance, repairs, gas, electric, water, heating oil, garbage collection, telephone and cell phone.

As you might expect, the allowances vary widely across the nation. Here are some examples:
 

Area

Family of 1

Family of 2

Family of 3

Family of 4

Family of 5 or more

Chicot County, Arkansas $  958 $1,126 $1,186 $1,322 $1,344
Marin County, California $3,067 $3,602 $3,796 $4,233 $4,301
Honolulu County, Hawaii $2,312  $2,715 $2,861 $3,190 $3,242
Cook County, Illinois $1,799 $2,113 $2,227 $2,483 $2,523
Anne Arundel County, Maryland $1,977 $2,322 $2,447 $2,728 $2,772
Carson City, Nevada $1,421 $1,669 $1,759 $1,961 $1,993
Merrimack County, New Hampshire $1,799 $2,113 $2,227 $2,483 $2,523
New York County, New York $2,973 $3,491 $3,679 $4,102 $4,168
Polk County, Oregon $1,506 $1,769 $1,864 $2,078 $2,112
Aiken County, South Carolina $1,193 $1,402 $1,477 $1,647 $1,673
Briscoe County, Texas $  966
 $1,134 $1,195 $1,332 $1,354
Juneau County, Wisconsin $1,221 $1,434 $1,511 $1,685 $1,712

4. Transportation

Transportation standards for taxpayers with a vehicle consist of two parts:

Nationwide amounts for monthly loan or lease payments — called ownership costs.
Additional amounts for monthly operating costs, which include repairs, maintenance, insurance, fuel, registration, inspection, parking and tolls.

There's also a single nationwide public transportation allowance.

Monthly Transportation Allowances
National Public Transportation — Fares $178
National Vehicle Ownership Costs $497 for 1 car $994 for 2 cars

Operating Costs by Area 1 Car 2 Cars
Northeast Region including ME, NH, VT, MA, RI, CT, PA, NY, NJ, 
except the following cities: $230 $460
Boston $250 $500
New York $304 $608
Philadelphia $252 $504
Midwest Region including ND, SD, NE, KS, MO, IL, IN, OH, MI, WI, MN, IA, except the following cities: $196 $392
Chicago $229 $458
Cleveland $196 $392
Detroit $274 $548
Minneapolis-St. Paul $184 $368
South Region including TX, OK, AK, LA, MS, TN, KY, WV, VA, MD, DC, DE, NC, SC, GA, FL, AL, except the following cities: $196 $392
Atlanta $226 $452
Baltimore $247 $494
Dallas-Ft. Worth $252 $504
Houston $292 $584
Miami $338 $676
Washington, D.C. $221 $442
West Region including NM, AZ, CO, WY, MT, NV, UT, WA, OR, ID, CA, AK, HI, except the following cities: $218 $436
Anchorage $198 $396
Denver $206 $412
Honolulu $210 $420
Los Angeles $289 $578
Phoenix $220 $440
San Diego $261 $522
San Francisco $235 $470
Seattle $216 $432

Posted in Tax Topics For Individuals

Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.