When Your Real Expenses Exceed the IRS Standards

Most real budgets do not fit the IRS tables. Rent is higher than the county standard. Medical costs are higher than $90 a month. A commute is longer than average. When that happens, the IRS has a word for the fix: deviation. Most taxpayers never ask for one. Many collection employees never offer.

The rule that makes deviations possible

IRM 5.15.1.2 says the standard amounts "are designed to account for basic living expenses. In some cases, based on a taxpayer's individual facts and circumstances, it will be appropriate to deviate from the standard amount when failure to do so will cause the taxpayer economic hardship." The taxpayer "must provide reasonable substantiation of all expenses claimed that exceed the standard amount."

IRM 5.15.1.8 repeats it: "National and local expense standards are guidelines. If it is determined a standard amount is inadequate to provide for a specific taxpayer's basic living expenses, allow a deviation. Require the taxpayer to provide reasonable substantiation and document the case file."

That is not a loophole. It is the design. The Treasury regulation that defines hardship, 301.6343-1(b)(4)(ii), lists the cost of living in your area, medical expenses, and "extraordinary circumstances such as special education expenses, a medical catastrophe, or natural disaster" among the things the IRS must consider. The standards cannot capture all of that. Deviations exist so the analysis can.

Where deviations are possible

• Food, clothing and other items: yes, with substantiation of the category that exceeds the standard. The IRM's example is "prescribed or required dietary needs."
• Miscellaneous: no. IRM 5.15.1.9: "Deviations from the standard amount are not allowed for miscellaneous expenses."
• Out-of-pocket health care: yes, with documentation. The IRM notes this often arises for taxpayers with no health insurance.
• Housing and utilities: yes, with documentation that the expense is necessary.
• Transportation: yes, including higher operating costs for long commutes, which "would generally meet the production of income test."

What makes a deviation request work

Every deviation must be "verified, reasonable and documented in the case history." Those three words are the checklist.

Verified means proof the expense exists and is being paid: bills, statements, canceled checks.

Reasonable means the amount makes sense for the need. A special diet costing several hundred dollars more a month may be reasonable. A special diet costing several thousand needs more explanation.

Necessary, which runs through all of it, means the expense serves health and welfare or the production of income. A physician's letter, a disability determination, an employer's statement about required travel: these establish necessity in a way a receipt cannot.

The housing factors

For housing, IRM 5.15.1.10.1 tells employees exactly what to weigh: the cost of moving to a new residence, "the increased cost of transportation to work and school that will result from moving to lower-cost housing," and the tax consequences of losing mortgage interest and property tax deductions.

Build your request around those three. If moving would cost first month, last month, a deposit, and a truck, and would add an hour of commuting each day, put numbers on all of it. Show the employee that the higher rent is cheaper than the alternative.

The handbook's own example in IRM 5.15.1.2 is "A taxpayer with physical disabilities or an unusually large family requires a housing cost that is not anticipated by the local standard," with mortgage or rent payments, utility bills and maintenance costs as proof.

What does not work

IRM 5.15.1.8: "A deviation from the local standard is not allowed merely because it is inconvenient for the taxpayer to dispose of valued assets or reduce excessive necessary expenses." The regulation itself excludes "the maintenance of an affluent or luxurious standard of living."

So "I like my house," "the kids would have to share a room," and "my car is nicer than average" will not carry a deviation. Deviations are about need, not preference.

Uneven expenses

Some expenses exceed the standard only because they are lumpy. IRM 5.15.1.3 tells employees to average items with varying monthly payments over 12 months, and IRM 5.15.1.8 allows a review of up to one year of expenses if three months is not representative. Ask for the longer window when your recent months understate your real costs, such as summer electric bills in Florida or an annual insurance premium.

Paper versus verbal substantiation

IRM 5.15.1.2 says substantiation "can consist of credible verbal communication or written documentation received from the taxpayer." For deviations, paper is almost always necessary in practice. The campus authority level tables in IRM 5.19.13.2 require paper substantiation when "the expense amounts claimed exceed the ALE standards and allowing these other expenses will result in a PPIA or CNC hardship." A deviation that tips a case into hardship is exactly that situation.

When the IRS says no

IRM 5.15.1.2 has an instruction many taxpayers never hear: "If a Collection employee and taxpayer disagree about an economic hardship determination, the taxpayer should be referred to the Taxpayer Advocate Service." You can also ask to speak with the employee's manager, and depending on where your case stands, you may have Collection Appeals Program rights or a Collection Due Process hearing.

Before you escalate, make sure your request is complete. A manager or advocate will look at the same file. If the proof is not there, the answer will not change.

Future expenses count too

A deviation does not have to be about the past. IRM 5.15.1.2 lists "Future expenses, e.g., the birth of a child or the necessary replacement of a car that will increase expenses" among the items that can be used to substantiate expenses. If you know a necessary cost is coming, document it now.

A car with 240,000 miles that will need replacing, a baby due in four months, a lease renewal with a scheduled increase: those are real changes to a household budget. Put them in front of the employee with proof, such as a mechanic's estimate, a physician's due date letter, or the new lease terms.

Write the request like a short brief

A deviation request should read like an argument, not a complaint. State the expense, the standard, the difference, why the higher amount is necessary, and what proof is attached. One paragraph per deviation is usually enough. Cite the IRM section that applies. Employees respond well to requests that tell them exactly which rule allows what you are asking for, because their manager will review the file with the same rules in mind.

A worked example

A single taxpayer in Hillsborough County earns $3,600 a month gross. Her rent and utilities are $2,300. The June 29, 2026 standard for one person is $2,073. She has a documented mobility impairment, and the apartment is one of few accessible units near her job and treatment center. She also pays $260 a month out of pocket for prescriptions not covered by insurance, against a $90 standard.

Without deviations, the IRS would cap housing at $2,073 and health care at $90. With documented deviations, it could allow $2,300 and $260. That is $397 a month of difference. For a taxpayer near the line, $397 is the difference between a payment demand and CNC.

Notice that none of those deviations required a fight about lifestyle. Each one rested on a documented need and a specific IRM provision. That is the pattern to follow.

The standards are where the IRS starts. With the right proof, they do not have to be where it finishes.