Offer in Compromise Calculator

Find out now how much you may reduce your tax debt

This free calculator will help you determine how much you may be able to reduce your tax debt to the IRS. The Offer in Compromise is the most popular and effective way to actually reduce the money you owe the IRS and anyone can file one. This calculator contains calculations the IRS uses to determine approval of and Offer in Compromise. Basically it is a mathematical formula to determine offer amount and is based entirely on your ability to pay. So let's get started by filling in your information below.

Your Assets

Don't use negative numbers on the calculator, if you feel something has a negative value, enter a zero amount in the blank.

Enter in your available cash. This is how much money you have in your bank accounts, CDs, money market accounts. Also include money not in banks such as the money in your pockets or under mattress.

Enter the equity value in your retirement accounts, such as your IRAs or 401K.

This is if you have a cash value for any life insurance policies.

Enter in how much you think your house would sell for today.

Enter in the value of all your personal property like you cars and other vehicles, jewelry, and everything in your house. You should use the quick sale value of your personal property, not the replacement cost,

Enter the amount of your outstanding your loans. This would include your home mortgage, car loans and loan secured with an asset of value. The IRS does not accept unsecured debt such as credit cards.

Your Income and Expenses

Enter your average monthly income. This will include salary, earnings from a business, rental income, interest and dividends, pensions, alimony, child support and any other income you receive.

Enter your average allowable monthly expenses. This would include food, clothing, housing utilities, vehicle ownership and operating costs. If you don't have a car, you will include any public transportation cost you pay for. This amount will also include health insurance and heath care cost, child care, alimony or child support payments you make, life insurance, income tax and loan payments for secured debt. However, you cannot include credit card payments or unsecured loan payments.

Your Offer Amount

This is the amount of your personal assets less your debts and loans.

This is your cash value that includes your cash, bank accounts, retirement accounts and value of your life insurance.

This is your income less allowable expenses.

This is the offer amount you may be able submit to the IRS if the IRS approves your offer. This could be the amount you may pay to eliminate your debt to the IRS. Before submitting an actual offer to the IRS, you will need to complete the Form 656, Form 433-A and possibly the Form 433-B to determine the actual offer amount you will include in your Offer in Compromise.

Now What?

Hopefully the calculation indicates you will get a substantial savings. If it the results indicate you will reduce your tax debt with an Offer in Compromise, it is in your best interest to submit an offer to the IRS. If the calculator does not indicate you will save money, you should look at your assets, debts, income and expenses more closely to see if the amounts are accurate. Even if you can't qualify for an Offer in Compromise, this website will look at different ways to handle your problem with the IRS.

The results from this calculator are just an approximation of what you may save with an IRS Offer in Compromise. As we examine the Offer in Compromise closer, we discover it is quite complicated. Before we get to the actual IRS Form 656 for the Offer in Compromise, we need to complete the IRS Form 433-A and perhaps the Form 433-B. This is where you will be entering detailed information about your assets, debts, income and expenses. The forms can be extensive and intimidating and require a lot of your personal information.

The most important section of the IRS Form 433-A is the Income and Expense section. If you have a business, you may also need to complete the Form 433-B. The IRS gives these forms extreme scrutiny. The IRS and most tax firms will not tell you, there are actual limits to your debts and expenses. To make sure your offer will be accepted, you will need to make sure you are within the IRS limits. One method to find out the best way to present your Offer in Compromise to the IRS is to use a tax service or a tax attorney. Unfortunately these services can cost from $3,000 to $7,000. A low cost alternative is using IRSexpress.com, which help you through the process and costs under $200. Use this website to help you, it has many articles and videos that will help you resolve you IRS problem.