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What are Allowable Living Expenses?

Allowable living expenses are those such as food, clothing, transportation, shelter, basic personal care, etc. When a taxpayer has a tax debt, the IRS cannot forcibly collect back taxes from them if it compromises their allowable living expenses. Subsequently, the IRS must leave the taxpayer enough money to continue to pay for basic necessities.

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

Expense

One Person

Two Persons

Three Persons

Four Persons

Food 

$315

$588

$660

$821

Housekeeping supplies

$32

$66

$65

$78

Apparel & services

$88

$162

$209

$244

Personal care products & services

$34

$61

$64

$70

Miscellaneous

$116

$215

$251

$300

Total

$585

$1,092

$1,249

$1,513

More than four persons

Additional Persons Amount

For each additional person, add to four-person total allowance:

$378

Source: IRS

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 taxpayers spend on health insurance.

Housing and UtilitiesDerived from the U.S. Census Bureau, American Community Survey, and BLS data, Housing and Utilities, standards 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. The taxpayer can claim the amount actually spent, or the standard, whichever is less.