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Need to spend savings on something allowable by IRS to bring numbers down

Los Angeles, CA |

I have a tax liability but my income is 99% of my expenses (I am literally right on the edge). However, I have $1,000 in savings. In order to show the IRS 3 months of tax statements that back up my true financial status, I need to spend that $1,000 on something allowable. Would something like new beds for my toddlers be "allowable" as a household expense? Any other suggestions?

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Attorney answers 2


I would look at national and local standards the IRS follows for housing, food, out of pocket medical, etc., before spending that $1000.

You may already qualify for deferring payments (hardship) or an offer in compromise you can afford.

Good luck with your situation.

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You are better off using the $1,000 to make a downpayment on your tax liability. Or to pay a competent tax lawyer to give you advice.