Can I qualify for an Offer In Compromise while on disability payments?

You can absolutely apply for an Offer in Compromise while receiving workers' compensation and not actively working. The IRS evaluates OICs based on your ability to pay, not your employment status. For your specific questions: First, yes, you can apply while not working - the IRS is concerned with your ability to pay regardless of the source of income. Second, having few or no assets isn't a problem - it actually strengthens your case that you can't pay the full amount. Third, you'll need to report your current income situation, not past tax returns - what's important is your present and future ability to pay. Fourth, workers' compensation does count as income for OIC purposes, even though you're not working - the IRS considers all sources of income. Be prepared to provide documentation of your medical situation, your current income from workers' comp, and your living expenses. The IRS will use this to calculate your "reasonable collection potential." Make sure you file Form 433-A with detailed financial information along with Form 656 for the actual offer.

After struggling with a similar tax situation last year, I discovered this amazing AI service called taxr.ai that completely changed how I approached my tax resolution. I was also considering an Offer in Compromise while on disability payments, and I was overwhelmed by all the requirements. The tool at https://taxr.ai analyzed my situation and helped me understand exactly what documentation I needed for my OIC application. It was incredibly helpful for figuring out how to properly report my disability income and explain my financial hardship. The best part was that it reviewed all my documentation before I submitted anything to make sure I wasn't missing anything that could cause a rejection.

Just wanted to follow up about my experience with taxr.ai - I decided to try it despite my initial skepticism, and I'm really glad I did. The service walked me through my entire OIC application step-by-step, helping me properly document my disability income and expenses. The biggest difference was how it explained exactly what documentation I needed to prove my financial hardship. My offer actually got accepted last month! They helped me present my case in a way that clearly showed I couldn't pay the full amount. It saved me from having to pay for an expensive tax attorney when I'm already struggling financially. Definitely worth checking out if you're in a similar situation.

When I was dealing with my back taxes while on disability, I found that calling the IRS directly was basically impossible. I'd wait for hours only to get disconnected. Then I found this service called Claimyr at https://claimyr.com that got me through to an actual IRS agent within 15 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c It was super helpful because I needed specific questions answered about how my disability payments would affect my OIC application. The IRS agent I spoke with gave me guidance that was specific to my situation that I couldn't find anywhere online. They explained exactly how workers' comp is evaluated for OIC purposes and what documentation I needed to include.

I need to eat my words and follow up about Claimyr. After posting my skeptical comment, I decided to try it because I was desperate to ask questions about my own tax situation. I was honestly shocked when they actually connected me to an IRS agent in about 20 minutes after I'd previously spent HOURS trying to get through myself. The agent I spoke with gave me specific guidance about my Offer in Compromise while on disability payments. They explained exactly how the IRS calculates "reasonable collection potential" when your income is solely from workers' comp and what documentation I needed to include to strengthen my case. That direct information from an IRS representative was invaluable - way more specific than anything I found online. I'm actually making progress on resolving my tax situation now instead of just stressing about it.

One thing to consider with your OIC application - make sure you're current on all required tax filings before submitting. The IRS will automatically reject your offer if you have any unfiled returns. Also, while your application is being considered, you need to make all required estimated tax payments (if applicable to your situation) and filing requirements. With workers' comp income, you might still need to file even if no tax is due. The IRS checks compliance before considering settlement options. You'll also need to be super detailed about your monthly expenses to demonstrate you truly can't pay the full amount.

Just went through this process last year. Make sure you're extremely thorough with Form 433-A (Collection Information Statement). The IRS will scrutinize every detail of your financial situation. Document ALL your medical expenses related to your disability because those can be counted as necessary living expenses. Also, consider checking if you qualify for Currently Not Collectible status as an alternative. With your situation (no assets, on disability), you might qualify. This doesn't eliminate the debt, but puts collections on hold. The IRS determined I was CNC last year and it bought me time while I improved my situation.

Andre, your situation is actually quite common and you definitely have options. Being on workers' comp while applying for an OIC isn't a barrier - in fact, it can strengthen your case since it demonstrates limited earning capacity. A few additional points to consider beyond what others have mentioned: 1) Make sure to include all your medical expenses related to your motorcycle accident as allowable living expenses on Form 433-A. This includes ongoing treatments, medications, physical therapy, etc. 2) Since you're in Washington State, you'll also want to address the state tax debt eventually, but focusing on federal first is smart since the IRS processes are generally more established. 3) Document your disability thoroughly - the IRS needs to understand this isn't a temporary situation where you'll be back to full earning capacity soon. 4) Consider whether you might qualify for "doubt as to collectibility" (you can't pay) versus "effective tax administration" (paying would create economic hardship). Given your circumstances, doubt as to collectibility seems most appropriate. The fact that you only made $12K in 2020 before your accident and are now on disability payments should work in your favor for demonstrating inability to pay. Just make sure every expense you claim is reasonable and well-documented.