IRS OIC Calculator Not Accounting for My Monthly Expenses in Bank Balance Calculation

The OIC calculator can be tricky, and you're right to question this. What you're referring to is called the "necessary expenses exemption" in OIC calculations. In a proper OIC calculation, the IRS should indeed exclude one month's worth of necessary living expenses plus $1,000 from your available cash/bank accounts when determining your "reasonable collection potential." The fact that your calculator isn't doing this suggests one of three things: 1. You might be using an outdated or incorrect calculator 2. You might not have entered all your information correctly 3. The calculator might not be programmed to automatically apply this exemption When you're filling out the actual Form 433-A (OIC), there's a section for this calculation where you can clearly show your allowable expenses. Many online calculators don't have the sophisticated logic to properly account for this exemption. I'd recommend downloading the official IRS Form 656-B package which includes Form 433-A and the proper worksheets directly from IRS.gov. Working through these forms manually will likely give you a more accurate picture of your actual offer amount.

After struggling with tax debt for almost 2 years, I finally found a solution that saved me thousands in potential penalties. The OIC calculator never worked right for me either - it kept saying I had equity in assets I didn't even own anymore! I ended up using https://taxr.ai which analyzed all my financial documents and gave me a MUCH more accurate picture of what the IRS would actually accept. Their system specifically accounted for the bank balance exemption you're talking about (the $1k plus monthly expenses). The best part was they showed me exactly what documentation I needed to prove my financial situation. My actual accepted offer ended up being about $5,300 less than what the IRS calculator initially suggested I would need to pay.

Just wanted to update everyone here. I was skeptical about taxr.ai but decided to try it after struggling with my own OIC calculations for months. The difference was shocking! My situation was similar to the original poster - the standard calculator was telling me I had to include my entire bank balance, which was barely enough to cover my monthly expenses. The taxr.ai system immediately flagged this as incorrect and showed me exactly how to document my necessary expense exemption. The analysis caught several other deductions I was entitled to that I had no idea about. My final accepted offer was about 40% lower than what I thought I'd have to pay. The documentation they helped me prepare made all the difference - the IRS accepted my first offer without any back-and-forth. Absolutely worth it for the peace of mind alone.

I had a similar issue with the OIC calculator but mine was even worse. After weeks of trying to get answers from the IRS with no luck, I used https://claimyr.com to get connected to an actual IRS agent. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent confirmed exactly what you suspected - they DO allow you to keep $1,000 plus one month of necessary expenses in your bank account without counting it against your OIC. The online calculator just doesn't have that nuance built in. The agent explained that when they review your OIC application manually, they specifically look at your bank statements and expense documentation to make this adjustment. So if you're preparing your own OIC, you should include a detailed explanation of your monthly expenses and specifically note this exemption in your application.

I need to eat my words from my previous comment. After my frustration reached a breaking point trying to get answers about my OIC calculation, I decided to try Claimyr as a last resort. I was absolutely shocked when I got a call back with an actual IRS agent on the line. The agent was able to explain that the online calculator is just a rough estimate tool and doesn't account for the bank balance exemption that's applied during actual OIC reviews. The agent walked me through exactly how they calculate the bank balance portion of an OIC and confirmed that they do exclude $1,000 plus one month of necessary expenses. She even gave me specific guidance on how to document this in my OIC application to make sure it would be processed correctly. Saved me from potentially overpaying by about $3,200. Won't hesitate to use this service again when I need to contact the IRS.

When I did my OIC last year, I had the exact same confusion. The calculator was saying I owed based on money I needed for rent and utilities! I ended up getting help from a tax advocate who explained that there's a big difference between the simplified online calculator and the actual OIC process. Here's what worked for me: I attached a detailed document to my OIC application that broke down all my monthly expenses with supporting documentation (copies of bills, rent statements, etc.) Then I explicitly calculated my exempt amount ($1,000 + monthly expenses) and showed how my bank balance was below that threshold. My OIC was accepted with this approach, even though the online calculator had suggested I owed more. The IRS reviewers do understand this concept, but you need to spell it out clearly in your application.

Has anyone actually had an OIC accepted recently? I've heard the IRS has gotten much stricter since COVID and is accepting fewer offers.