Worksheets
Tool 4: Ability-to-Pay Worksheet
Organize income, necessary expenses, assets and debts with an ability-to-pay worksheet before discussing an IRS collection alternative.
Book by Justus D Eapen · The IRS Is Not the End of the World · professional review pendingThis page’s Source Notes and review status2 min read
Review status: book guide, pending professional review. This text has not yet been reviewed by an enrolled agent, CPA, or attorney. It is general education, not advice for your situation. Figures, forms, and thresholds change; verify them on IRS.gov.
Monthly income (gross, all sources):
Scroll horizontally if needed to see all columns.
| Source | Monthly amount |
|---|---|
| Wages (gross) | |
| Self-employment net profit (12-month average) | |
| Pension, Social Security, annuities | |
| Rental, interest, dividends, other | |
| Spouse's income (for expense allocation if not jointly liable) | |
| Total household income |
Monthly allowable expenses (use current Collection Financial Standards from IRS.gov where the table says Standard; use actual documented cost where it says Actual):
Scroll horizontally if needed to see all columns.
| Category | Basis | Amount |
|---|---|---|
| Food, clothing, housekeeping, personal care, misc. | National Standard by household size | |
| Out-of-pocket health care | National Standard per person, or actual if higher and documented | |
| Housing and utilities | Lesser of actual or Local Standard for your county | |
| Vehicle ownership (payment) | Lesser of actual or National Standard per vehicle; zero if paid off | |
| Vehicle operating | Lesser of actual or Local Standard | |
| Public transportation (if no vehicle) | Standard | |
| Current federal, state, and local taxes | Actual | |
| Health insurance premiums | Actual | |
| Court-ordered payments | Actual | |
| Child or dependent care | Actual | |
| Term life insurance | Actual | |
| Secured debts other than housing and vehicle | Actual, if necessary | |
| Federal student loan minimum | Actual, if paying | |
| Total allowable expenses |
Monthly disposable income = total income minus total allowable expenses. If you are not jointly liable with your spouse, allocate shared expenses by your share of household income.
Net realizable equity:
Scroll horizontally if needed to see all columns.
| Asset | Fair market value | Times 80% (quick sale) | Minus loans | Minus exclusions | Net equity |
|---|---|---|---|---|---|
| Cash and bank accounts | n/a | Cash exclusion on current form | |||
| Vehicle 1 | Vehicle exclusion on current form | ||||
| Vehicle 2 | |||||
| Home | |||||
| Retirement accounts | Taxes and penalties on withdrawal | ||||
| Life insurance cash value | |||||
| Other property, investments, business assets | |||||
| Total net realizable equity |
Related IRS notices