Episode summary

When you owe the IRS and can't pay in full, the IRS decides what you can afford — and it doesn't use your real budget to do it. In this episode of Talkin' Tax, Jessica Thibodeaux of Bryson Law Firm explains the IRS's allowable living expense standards, walks through the actual figures for Lafayette, Louisiana, and shows why the IRS doesn't have to count your full mortgage, private school tuition, credit card payments, and other expenses above its caps.

In this episode

We start with how the IRS measures your ability to pay. The IRS uses the Collection Financial Standards whenever it reviews a Form 433-A or 433-F for a payment plan, an offer in compromise, or Currently Not Collectible status. We explain the three groups of standards — National Standards, out-of-pocket health care, and Local Standards — and why the Local Standards for housing and transportation work as hard caps.

Next, we walk through the numbers that apply to Lafayette Parish residents, including the housing and utilities cap that has to cover your mortgage, insurance, property taxes, and every utility bill.

We then cover the expenses the IRS doesn't have to count: mortgage payments above the parish cap, private school tuition, car notes above the standard, credit card payments, and most charitable giving. We also explain the six-year rule and the one-year rule, two exceptions that can let the IRS allow more.

Finally, we follow a hypothetical Lafayette family of four who come up $650 short every month on their real budget — but who, by the IRS's math, can afford to pay about $2,856 a month.

Key Lafayette numbers

These are the IRS standards effective June 29, 2026, as discussed in the episode. For a family of four in Lafayette Parish, the housing and utilities cap is $2,355 a month, and the National Standard for food, clothing, and other items is $2,176 a month. Transportation follows the IRS's South region: up to $703 a month per vehicle for a loan or lease payment (zero if the car is paid off), plus up to $291 a month per vehicle for operating costs, or $220 a month for public transportation if you don't have a car. Out-of-pocket health care is allowed at $90 per person under 65 and $163 per person 65 or older, plus actual health insurance premiums.

Resources

Read the companion blog post on our website at [https://www.brysonlawfirm.com/news/1007-what-the-irs-says-you-can-afford-allowable-living-expenses.html]. The figures in this episode come from the IRS's Collection Financial Standards, including the Louisiana housing and utilities standards, the National Standards for food, clothing and other items, the transportation standards, and the out-of-pocket health care standards. The rules on allowable expenses appear in IRM 5.15.1, and the six-year and one-year rules in IRM 5.14.1.

Get help

If you owe the IRS, Bryson Law Firm, LLC can review your finances against the current standards and help you choose the right path, whether that's an installment agreement, an offer in compromise, or Currently Not Collectible status. Contact us at brysonlawfirm.com.

This episode and these show notes are for general information only and are not legal or tax advice. The figures discussed are the IRS Collection Financial Standards effective June 29, 2026, and are subject to change. Please consult a qualified professional about your specific situation.