How much will I have to pay on an Installment Agreement?

It really depends upon how much money you’re earning, your filing status, and how many people you are claiming as exemptions.

The IRS is going to evaluate your family’s monthly income and compare it to what they call monthly allowable expenses.

The IRS has standards for these allowable expenses.

Some of the categories include food, clothing, and miscellaneous; housing and utilities; car payments; operating cost of the vehicle; health insurance, out of pocket medical expenses and taxes.

The IRS looks at the monthly income available to pay on an Installment Agreement and the allowed monthly expenses.

There are maximum allowable standards and if you’re above those standards, they’re only going to allow you up to the maximum standard. The IRS does an analysis of what your expenses are and then apply the maximum allowable standards. The IRS is going to calculate your monthly expenses and compare it to your monthly income.

Generally, the amount of your monthly income that exceeds your monthly expenses is what the IRS is going to think is available to pay them.

Whether you can afford to pay that, it really depends. Sometimes the amount the IRS wants you to pay is much higher than you feel that you can afford.

Sometimes it gets into a negotiating arrangement with the IRS to determine an amount to pay off within the statute that’s acceptable to them based upon your monthly income and monthly expenses.

That’s how the IRS determines how much you are going to be required to pay on an Installment Agreement.