Offer in Compromise Calculator: Estimate the Minimum Offer on Form 433-A (OIC)
Form 433-A (OIC) (Rev. 4-2026) sets a minimum offer: available equity in assets (Box A) plus remaining monthly income (Box F) multiplied by 12 if the offer is paid as a lump sum, or by 24 if paid periodically. This calculator repeats that arithmetic for individuals and joint offers. The IRS verifies each figure and decides what it accepts.
Use whole dollars from current statements. Lines (39) and (45) fill in from the IRS Collection Financial Standards effective June 29, 2026, because the form says to list the full standard there “even if the actual amount you pay is less.” Other expense lines take what you actually pay.
The result is the form’s math on your numbers, not an IRS figure: “Asset value is subject to adjustment by IRS based on individual circumstances.” Self-employed filers also complete Sections 4 to 6, not included here. The IRS’s own Offer in Compromise Pre-Qualifier can also “compute a preliminary offer amount.”
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Reasonable collection potential, in form boxes
The Internal Revenue Manual (IRM) defines reasonable collection potential (RCP) as “The amount that could reasonably be collected from the taxpayer.” Policy Statement 5-100 in IRM 5.8.1 adds: “Generally, a doubt as to collectibility (DATC) offer amount must equal or exceed a taxpayer’s reasonable collection potential (RCP) in order to be acceptable.” Form 433-A (OIC) turns RCP into boxes:
- Box A: equity in personal assets, lines (1) through (7).
- Box D minus Box E = Box F: household income, lines (30) to (38), less expenses, lines (39) to (51); 0 if negative.
- Box G is Box F times 12; Box H is Box F times 24.
- Offer: Box A, plus Box B if self-employed, plus Box G or Box H. “Your offer must be more than zero ($0).”
The booklet then says “Your offer amount must be equal to or greater than the amount calculated in Form 433-A(OIC) or 433-B(OIC).”
The Section 3 asset lines
Most lines take current market value times .8 (quick sale value), less loans.
| Line | Asset | How the form values it |
|---|---|---|
| (1) | Cash and bank, online and stored value accounts | Total balances minus $1,000 |
| (2) | Investment accounts and digital assets | Market value minus loans; digital assets at U.S. dollar value |
| (3) | Retirement accounts | Market value x .8, minus loans |
| (4) | Life insurance cash value | Cash value minus loans |
| (5) | Real property | Market value x .8, minus mortgages |
| (6) | Cars, boats, motorcycles | Market value x .8, minus loans (leased: $0); minus $3,450 on the first vehicle, and on a second only for a joint offer |
| (7) | Valuables, furniture and personal effects | Market value x .8, minus loans; minus $11,980 from the line total |
A negative line is entered as 0: an underwater house adds nothing but does not reduce other assets. The $11,980 matches the 2026 levy exemption for household furniture and personal effects under § 6334(a)(2), set in Rev. Proc. 2025-32.
Where IRS review can change these lines
- The .8 multiplier. IRM 5.8.5.4.1: “A higher or lower percentage may be applied in determining QSV when appropriate.”
- Retirement accounts. The form notes the reduction “may be greater than 20%,” and IRM 5.8.5.10 values equity net of tax and early withdrawal penalty.
- The $1,000 and $3,450 subtractions “are only applied if you are an individual and after we determine you cannot full pay the liabilities from equity in assets, an installment agreement, or a combination of both.”
Household income, expenses and the 2026 standards
Box D counts the household’s average gross monthly income, including income “that is considered not taxable”: wages, benefits, money others contribute, investment and rental income, support received, and net business income on line (36) with depreciation added back. Box E counts lines (39) through (51).
Line (39): national standards, monthly, effective June 29, 2026
| Household size | Food, clothing and other items |
|---|---|
| 1 person | $867 |
| 2 persons | $1,558 |
| 3 persons | $1,857 |
| 4 persons | $2,176 |
| Each additional person | Add $397 |
The total covers food, housekeeping supplies, apparel, personal care and a miscellaneous amount that can cover credit card payments. It is allowed “without questioning the amounts they actually spend”; more needs documentation, and no deviation is allowed for the miscellaneous part.
Line (45): out-of-pocket health care
The 2026 standard is $90 a month per person under 65 and $163 per person 65 and older. It is “allowed in addition to the amount taxpayers pay for health insurance,” which goes on line (44).
Housing and transportation vary by place
The IRS local standards “vary by location. In most cases, the taxpayer is allowed the amount actually spent, or the local standard, whichever is less.” Housing and utilities go by county, and transportation by region and metro area. The calculator does not hold those tables; where costs exceed the local standard, the IRS’s Box E can be lower and its offer higher.
The booklet adds that the IRS will not consider “tuition for private schools, college expenses, charitable contributions, and other unsecured debt payments.”
Unsure how the IRS will value an asset or expense?
A free, confidential evaluation can go over the figures on your Form 433-A (OIC) and the collection options the IRS describes.
Lump sum or periodic: 12 months or 24
A lump sum offer sends 20% with the application and pays the rest “in 5 or fewer payments within 5 or fewer months of the date your offer is accepted,” so Box F is multiplied by 12. A periodic offer pays monthly “within 6 to 24 months,” including during review, so Box F is multiplied by 24.
When fewer months remain to collect
The printed form always uses 12 or 24. IRM 5.8.5.25 adds that “when there are less than 12 or 24 months remaining on the statutory period for collection on all tax periods, use the number of months remaining.” If any one period has more time left, 12 or 24 still applies. Our CSED calculator estimates when that period ends; enter the months left above to apply the limit.
The $205 fee and the low-income certification
The $205 fee (26 CFR 300.3) is separate from the offer, one per Form 656. Form 656 (Rev. 4-2026) waives it for an individual whose adjusted gross income on the latest Form 1040, or household gross monthly income from Form 433-A (OIC) times 12, is at or below this chart:
| Family size | 48 states, D.C., territories | Alaska | Hawaii |
|---|---|---|---|
| 1 | $39,900 | $49,875 | $45,900 |
| 2 | $54,100 | $67,625 | $62,225 |
| 3 | $68,300 | $85,375 | $78,550 |
| 4 | $82,500 | $103,125 | $94,875 |
| 5 | $96,700 | $120,875 | $111,200 |
| 6 | $110,900 | $138,625 | $127,525 |
| 7 | $125,100 | $156,375 | $143,850 |
| 8 | $139,300 | $174,125 | $160,175 |
| Each additional | $14,200 | $17,750 | $16,325 |
Section 7122(c)(3) sets the line at “250 percent of the applicable poverty level.” Certification removes the fee, the initial payment and periodic payments while the offer is pending, not the offer itself: the first payment is due “30 calendar days after acceptance of the offer.” It is not available to businesses other than sole proprietors or for a deceased individual, and the IRS verifies it.
When the arithmetic points away from an offer
The IRS says: “Generally, we won’t accept an offer if you can pay your tax debt in full through a payment plan and/or equity in assets.” IRM 5.8.5.2 has examiners check that first, “over the remaining Collection Statute Expiration Date (CSED),” without the $1,000 and $3,450 allowances. Given the amount owed and the months left, the calculator runs a rough version of that check, without the interest and penalties the IRS adds. See the installment agreement and currently not collectible guides.
What this calculator leaves out
- Business assets and income: Sections 4 to 6 and Box B; corporations, partnerships and LLCs use Form 433-B (OIC).
- Dissipated assets, which IRM 5.8.5.18 reviews over “a three year time frame” and six months around assessment.
- Special circumstances: the form says to offer “the amount you can pay” and explain on Form 656, Section 3.
- Effective tax administration offers, where full payment would cause hardship or be unjust.
- Doubt as to liability, filed on Form 656-L, never together with an ability-to-pay offer.
- IRS income adjustments under IRM 5.8.5.20, such as expected income for someone temporarily unemployed.
When an attorney matters
Disputes come from what goes into the arithmetic, and some turn on law:
- Dissipated asset findings, which IRM 5.8.5.18 says lead to rejection as not in the best interest of the government if the value is left out of the offer.
- Joint and separate liabilities, where IRM 5.8.5.24 computes one household RCP, allocates it across offers and applies community property law in those states.
- Hardship or public policy offers under 26 CFR 301.7122-1(b)(3), or a disputed balance on Form 656-L.
- A proposed rejection. IRM 5.8.7.7 says the most common DATC reason is that “more can be collected than was offered,” and the examiner offers “a copy of the financial analysis.”
Related guides
Frequently Asked Questions
How does the IRS calculate a minimum offer in compromise?
Form 433-A (OIC) adds equity in assets (Box A), plus Box B for the self-employed, to Box F multiplied by 12 (lump sum terms) or 24 (periodic terms). The offer must be more than zero.
What are the IRS allowable living expenses for 2026?
Under the Collection Financial Standards effective June 29, 2026, the monthly national standard for food, clothing and other items is $867 for one person, $1,558 for two, $1,857 for three and $2,176 for four, plus $397 per additional person. Out-of-pocket health care is $90 per person under 65 and $163 at 65 and older.
Is a lump sum offer lower than a periodic offer?
On the form, yes whenever Box F is above zero, because it is multiplied by 12 instead of 24. A lump sum offer sends 20% with the application and pays the rest in 5 or fewer payments within 5 months of acceptance.
Who does not pay the $205 application fee?
An individual whose adjusted gross income, or household gross monthly income from Form 433-A (OIC) times 12, is at or below the Form 656 low-income chart, such as $39,900 for one person in the 48 contiguous states. The IRS verifies it.
Is the result what the IRS will accept?
No. It is the form’s arithmetic on your entries. The IRS verifies values, applies local expense caps and IRM valuation rules, and will not accept an offer when the balance can be paid in full, absent special circumstances.
Questions about your offer in compromise figures?
A free, confidential evaluation can go over your Form 433-A (OIC) entries, the IRS standards behind them and the other options the IRS describes.
Ray Neu
Ray Neu is the publisher of IRSAttorneys.net. A former law enforcement officer with a background in criminal justice and digital publishing, he oversees editorial direction, partnership standards, and compliance review for the site. He is not an attorney and does not provide legal advice; all tax law content is sourced and reviewed against the standards documented on the Editorial Team & Standards page.
Sources
- IRS Form 656-B booklet with Form 433-A (OIC) and Form 656, Rev. 4-2026 (PDF)
- IRS: Offer in compromise
- IRS: Collection Financial Standards
- IRS: National standards, food, clothing and other items
- IRS: 2026 National Standards (PDF)
- IRS: National standards, out-of-pocket health care
- IRS: 2026 Health Care Standards (PDF)
- IRS: Local standards, housing and utilities
- IRS: Local standards, transportation
- IRM 5.8.1, Offer in Compromise: Overview
- IRM 5.8.4, Investigation
- IRM 5.8.5, Financial Analysis
- IRM 5.8.7, Return, Terminate, Withdraw, and Reject Processing
- IRM 5.15.1, Financial Analysis Handbook
- Rev. Proc. 2025-32 (PDF)
- IRS Form 656-L (PDF)
- 26 U.S.C. § 7122
- 26 U.S.C. § 6334
- 26 CFR 301.7122-1
- 26 CFR 300.3
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