If the IRS averages the taxpayer’s income over the last 3 years, do they use that for the RCP calculation instead of their current income?

Yes, the idea is to determine what the future income should be. If the income shows an upward trajectory (ie. is increasing each year), then the IRS will use the current year. Similarly, if it is consistently dropping, then IRS would also use the current year\’s income.

If, however, the taxpayer\’s income is fluctuating to the point where there is no discernible pattern, then the IRS will average the income and use that in its RCP calculation.