The bold faced Note under Monthly Household Expenses in Section 7 of Form 433-A (OIC) states that “For expenses claimed in boxes (39) and (45) only, you should list the full amount of the allowable standard even if the actual amount you pay is less.” Does that mean for the other items under Monthly Household Expenses you have to show the actual amount if lower than the allowable standard amount?
You are absolutely correct. Box (39) and (45) are NATIONAL standards that are the same for everybody. See IRM 22.214.171.124.1(2): “Taxpayers are allowed the National Standard Expense amount for their family size, without a need to substantiate the amount actually spent.”
The other expenses tend to be regional or local in nature. The guidance set forth in IRM 126.96.36.199 (with respect to OIC’s) states that for the other expenses, the standard or the actual amount should be used (whichever is lower). However, I would make 2 points regarding this issue.
- A good practitioner would look for all reasonable expenses when determining the actual expense. Example: vehicle operating- it’s not just gas and oil changes. Registration fee’s, any type of repair or standard fixes (tire changes, rotation, etc.), vehicle insurance, etc. Also, in OIC’s the IRS allows an additional $200 per month for older vehicles (8 years or 100,000 miles).
- The IRM also states that if the standard is claimed, documented proof is not required- (188.8.131.52.3(4): “Substantiation for this allowance is not required unless the amount claimed is more than the total allowed by any of the transportation standards.”).
So in summary, while the lesser of the two should be used, there may be some wiggle room when it comes to the selection of the actual vs standard expense.
Hope this helps,