Short answer
This calculator estimates your reasonable collection potential, the minimum offer the IRS usually expects: quick-sale equity in your assets plus remaining monthly income times 12 (IRS.gov, April 2026) (lump sum) or 24 (IRS.gov, April 2026) (periodic). It is not the official IRS Offer in Compromise Pre-Qualifier; run that free tool too before paying the $205 (IRS.gov, 2026) fee (2026).
Key takeaways
- Reasonable collection potential (RCP) = net realizable equity in your assets + future remaining income; an offer below it is usually rejected unless you have special circumstances.
- A lump-sum offer counts 12 months of remaining income and needs 20% (IRS.gov, April 2026) of the offer with the application; a periodic offer counts 24 months and is paid over 6 to 24 months (IRS.gov, April 2026).
- Most assets count at quick-sale value, 80% of today’s market value on Form 433-A (OIC) Rev. 4-2026, minus what you still owe on them.
- If your RCP is at or above what you owe, the IRS expects full payment, usually through a payment plan.
- The calculator runs in your browser and stores nothing. The IRS Pre-Qualifier is the official check.
Estimate your minimum offer
Work through the four steps with your latest bank and loan statements. Leave any line that does not apply blank. Results appear below the button, and nothing you type is sent or saved.
How the calculation works
The IRS says it “generally approve[s] an offer in compromise when the amount you offer represents the most we can expect to collect within a reasonable period of time.” That amount is your reasonable collection potential. The calculator follows Section 8 of Form 433-A (OIC) (Rev. 4-2026 (IRS.gov, 4-2026)), the financial statement individuals send with an offer.
Minimum offer = net realizable equity + (remaining monthly income x 12) for a lump-sum offer, or + (remaining monthly income x 24) for a periodic payment offer.
Step 1: net realizable equity
Equity is what the IRS could reach if your assets were sold quickly. Form 433-A (OIC) values each asset one of two ways:
| Asset | How it counts | Form allowance |
|---|---|---|
| Cash, checking, savings | Full balance | First $1,000 (IRS.gov, Rev. 4-2026) excluded |
| Stocks, bonds, digital assets | Full market value minus loans | None |
| Life insurance cash value | Full cash value minus policy loans | None |
| Retirement accounts | 80% (IRS.gov, Rev. 4-2026) of value minus loans (the IRS may reduce it further for taxes and withdrawal penalties) | None |
| Real estate | 80% of market value minus mortgages | None |
| Vehicles you own | 80% of market value minus the loan | $3,450 (IRS.gov, Rev. 4-2026) off one vehicle (two on a joint offer); leased vehicles count as nothing |
| Other valuables, furniture, personal effects | 80% of market value minus loans | $11,980 (IRS.gov, Rev. 4-2026) deducted from the total |
| Business assets (self-employed) | Bank accounts in full; equipment at 80% minus loans | Assets used to produce income count as nothing; a tools-of-the-trade allowance applies (not modeled) |
No line can go below zero, so being underwater on a house does not reduce the equity in your car. The dollar allowances are the ones printed on Form 433-A (OIC) Rev. 4-2026; the IRS updates the form periodically.
Step 2: remaining monthly income
Take your household’s average gross monthly income (wages, Social Security, pensions, net business and rental income and any other regular income, for everyone who contributes) and subtract allowable monthly expenses. For food, clothing and miscellaneous items and for out-of-pocket health care, the form uses the IRS national standard amounts even if you spend less. Housing, utilities and vehicle costs are allowed up to the local standards for your county and household size. You enter those amounts yourself from the IRS pages:
- National Standards: food, clothing and other items
- National Standards: out-of-pocket health care
- Local Standards: housing and utilities
- Local Standards: transportation
Tuition, charitable giving and payments on credit cards and other unsecured loans are generally not allowed. If expenses exceed income, remaining monthly income is zero, not negative.
Step 3: future remaining income
- Lump-sum offer (paid in 5 or fewer payments within 5 months (IRS.gov, April 2026) of acceptance): remaining monthly income x 12.
- Periodic payment offer (paid over 6 to 24 months): remaining monthly income x 24.
Paying faster lowers the minimum because fewer months of income are counted. The form adds one warning: these multipliers and allowances do not apply if the IRS decides you can pay the full balance within the collection period, which is generally 10 years (IRS.gov, 2026) from assessment.
Worked example with assumed figures
Example (assumed figures). A single wage earner owes $60,000 in back taxes, has filed every return and applies alone. These numbers are invented to show the arithmetic, not typical results.
| Item | Value entered | Counts toward RCP |
|---|---|---|
| Checking and savings | $5,000 | $4,000 (after the $1,000 allowance) |
| Car | $15,000 value, $8,000 loan | $15,000 x 80% = $12,000, minus $8,000 = $4,000, minus the $3,450 allowance = $550 |
| 401(k) | $9,500, no loan | $9,500 x 80% = $7,600 |
| Home | $300,000 value, $250,000 mortgage | $240,000 minus $250,000 = below zero, so nothing |
| Net realizable equity | $4,000 + $550 + $7,600 = $12,150 | |
| Remaining monthly income | $5,200 income, $4,900 allowable expenses | $300 a month |
- Lump-sum offer: $300 x 12 = $3,600, so the minimum offer is $12,150 + $3,600 = $15,750. The initial payment is 20% of that, $3,150, sent with the application and the $205 fee; the remaining $12,600 is due after acceptance.
- Periodic offer: $300 x 24 = $7,200, so the minimum offer is $12,150 + $7,200 = $19,350, about $806 a month over 24 months, starting with the application.
In this example an offer is plausible because $15,750 is far below the $60,000 owed. If the same person had $80,000 of home equity, the quick-sale equity alone would exceed the balance and the IRS would expect full payment instead.
Lump-sum vs periodic offers: fees, payments and low-income certification
| Rule (2026) | Lump-sum offer | Periodic payment offer |
|---|---|---|
| Months of future income counted | 12 | 24 |
| Application fee | $205, non-refundable | $205, non-refundable |
| Sent with the application | 20% of the offer, non-refundable | The first proposed monthly payment |
| While the IRS reviews the offer | No further payments required | Keep paying monthly; a missed payment can get the offer returned |
| After acceptance | The rest in 5 or fewer payments within 5 months | Continue monthly until paid, within 6 to 24 months |
Low-Income Certification. Individuals whose household income is at or below 250% (IRS.gov, 2026) of the federal poverty level do not pay the application fee, the initial payment or monthly payments during review. Form 656 prints the limits in dollars: $39,900 (IRS.gov, April 2026) for a household of one and $82,500 (IRS.gov, April 2026) for a household of four in the 48 contiguous states (Alaska and Hawaii are higher). Qualifying for the waiver does not change the RCP test: you still have to offer an amount the IRS considers acceptable. The calculator checks your household income against the chart when you enter it.
The IRS keeps your fee and payments and applies them to your balance even if the offer is rejected. It may also keep any refund for a return assessed before the date it accepts your offer, and the offer is deemed accepted if the IRS makes no decision within 2 years (IRS.gov, 2026).
Assumptions and last updated
Last updated: 29 September 2026. Fees, payment rules, multipliers and low-income limits come from our figures registry, which we check against IRS.gov and Form 656-B (Rev. 4-2026 (IRS.gov, 4-2026)) and review every January. The quick-sale factor and dollar allowances are those printed on Form 433-A (OIC) Rev. 4-2026.
- It is an estimate, not an IRS determination. An IRS offer examiner verifies every value, may use a different market value, and may ask for more.
- It does not look up the Collection Financial Standards for you. You enter your allowable expenses; if you enter actual spending above the standards, your estimate will be too low.
- It models an individual or sole proprietor offer (Form 433-A (OIC)). Corporations, partnerships and LLCs use Form 433-B (OIC), which has different lines.
- It does not include special circumstances (serious illness, age, economic hardship) that can justify an offer below RCP, or doubt as to liability offers.
- It runs entirely in your browser. Nothing you type is sent to us, to the IRS or to anyone else, and nothing is saved.
What to do with your result
- RCP at or above your balanceThe IRS will expect full payment. Compare payment plan options.
- RCP well below your balanceRead how the IRS evaluates offers, then run the Pre-Qualifier.
- RCP near zeroCurrently not collectible status may fit better than an offer.
- Penalties are a big part of the balanceRemoving them first can change which option fits.
Before you apply, confirm you are eligible: every required return filed, required estimated payments made, and no open bankruptcy (see Fresh Start qualifications). Then check your numbers with the official IRS Offer in Compromise Pre-Qualifier. Individuals can file an offer through their IRS Online Account or on paper with Form 656 and Form 433-A (OIC).
If you have unfiled years, significant home equity, business assets or special circumstances, a professional review can be worth it. If your numbers are straightforward, the IRS forms and the Pre-Qualifier are designed for you to use yourself. Low Income Taxpayer Clinics help eligible taxpayers for free or a small fee.
Frequently asked questions
Add the quick-sale equity in your assets (most assets at 80% of market value minus loans, on Form 433-A (OIC) Rev. 4-2026) to your remaining monthly income times 12 for a lump-sum offer or 24 for a periodic offer. The total is your reasonable collection potential, the minimum the IRS usually accepts.
No. This is an independent estimate built on the Form 433-A (OIC) steps. The official, free IRS Offer in Compromise Pre-Qualifier is at irs.treasury.gov/oic_pre_qualifier. Run it before you pay any application fee.
There is no fixed minimum. The IRS generally accepts an offer that equals or exceeds your reasonable collection potential, and the offer must be more than zero. An offer below RCP can succeed only with special circumstances, such as serious illness or economic hardship, that you explain on Form 656.
Yes. Form 433-A (OIC) counts retirement accounts at 80% of their current value minus any loan, and notes that the IRS may reduce the value further for the taxes and early-withdrawal penalties you would owe on a withdrawal.
Food, clothing, housing, utilities, vehicle costs and out-of-pocket health care, measured against the IRS Collection Financial Standards, plus items such as health insurance, court-ordered payments, child care, current taxes and secured loans. Tuition, charitable giving and credit card payments are generally not allowed.
Not if you meet the Low-Income Certification on Form 656: household income at or below 250% of the federal poverty level, for example $39,900 for a single person in the 48 contiguous states. You then skip the $205 fee, the initial payment and monthly payments during review.
Then the IRS would expect full payment and would generally reject an offer. A payment plan, including the Simple Payment Plan, is the usual route. You can apply for one yourself with the IRS Online Payment Agreement.
Sources
- IRS Offer in Compromise Pre-Qualifier
- IRS: Offer in compromise
- IRS Form 433-A (OIC) (Rev. 4-2026) PDF
- IRS Form 656-B, Offer in Compromise Booklet (Rev. 4-2026)
- IRS Form 656 (Rev. 4-2026) PDF
- IRS: Collection Financial Standards
- 26 U.S.C. § 7122, Compromises
- 26 U.S.C. § 6502, Collection after assessment
We check every figure against IRS.gov and log changes on the key figures page.
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This page is general information about IRS rules, not tax or legal advice for your situation. IRS figures change; each one links to its official source and the date we last checked it.