IRS Wage Garnishment
If you owe money to the IRS, be aware that you may be subject to a wage garnishment. A wage garnishment is a powerful collection tool the IRS uses to ensure they get paid. If you make timely payment in full, you can avoid this disastrous outcome.
What is a Wage Garnishment?
A tax levy, or wage garnishment, is a tool that the IRS imposes on your wages each pay period until you do one of the following:
- Arrange to pay the taxes you owe
- Pay the debt in full
- Get into a payment plan or financial hardship (also called a “non collectible status”) where the wage garnishment is released
If you are subject to a wage garnishment, the IRS will calculate your garnishment based on the pay you receive and the number of dependents you have in the year of the levy. Additionally, the amount you owe the IRS will include the penalties and interest for overdue taxes.
What Can the IRS Garnish?
The IRS can garnish the following:
- 1099 income
Be aware, if you have a court order to pay child support, the IRS cannot garnish these funds.
How Much Will You Pay?
The IRS updates its figures annually, and you can view the most current chart here. From the chart, the IRS will exempt the following:
- Single person will have $49.81 exempt with zero dependents and an additional $16.92 for each dependent based on a daily pay period. These figures rise to a base of $249.04 weekly, $498.08 biweekly and $1,097.17 per month and rise based on dependents.
- Married filing jointly will see the single person’s figures double, so you can keep $99.62 per day plus $16.92 for each dependent.
Figures will also change if you’re married and filing separately or if you are Head of Household.
How Wage Garnishment Works
The IRS must follow strict protocols before a wage garnishment, including:
- Sending one final notice, called a “Notice of Intent to Levy.”
- Waiting 30 days from receiving the Notice to begin garnishing your income if you do not respond with an alternate resolution.
- IRS officials must assess your tax liability and demand you make payment before wage garnishment is allowed.
- Allowing 30 days from the “Final Notice of Intent to Levy” to allow you to make other arrangements or appeal the garnishment.
After all IRS protocol is met, your employer will receive a notice of wage garnishment from the IRS. Many forms may be sent, but the most common are:
- Form 668–W(ICS)
- Form 668-W(C)
Commonly, employers don’t even notify you until the wage garnishment is seen and taken out of your paystub. Once you do know about it, the first fear is that you’ll be fired. Employers cannot fire you for the garnishment, but laws become blurry if multiple garnishments are levied against you. The employer will have a responsibility to supply you with a Statement of Exemptions and a Filing Status form at some point.
Depending on the limits for the given year, the IRS can decide to:
- Garnish a specific amount for each day you work
- Allow you to keep a certain sum of money per day based on exemptions and filing status
The IRS will continue to garnish your wages until 100% of your debt is paid. However, the IRS often has alternatives available that can help you lower the monthly payment you make or even satisfy your debt for less.
Wage garnishment isn’t ideal, and the IRS will send you multiple notices about the past-due taxes that you owe. If you choose to ignore these notices, which will include information on alternative payment options, the last resort is a tax levy so that the government receives the money that you owe them.
We can work on an agreement with the IRS to help satisfy the taxes you owe without causing you irreparable financial strain.
You Have a Right to Appeal a Wage Garnishment
You do have a right to appeal. You have a few options:
- Dispute the notice from the IRS on the grounds that you do not believe that you owe the debt
- Request certain types of income be exempt from garnishments, such as veteran benefits or Social Security
Often, even when benefits are exempt from garnishment, they’re still open for seizure once funds are deposited into your account. You definitely want to avoid this from happening as it is hard to get this money back, although it is possible depending on your financials.
Appealing your wage garnishment is an arduous process, and it requires an experienced tax attorney to develop a plan based on your financial situation. Our team may be able to settle your debt, agree on a payment plan with the IRS or get the IRS to accept an Offer in Compromise.
Let Us Help You Navigate Wage Garnishment
You deserve the peace of mind that you’ll have money every pay period to pay your bills. If you want to remove an IRS wage garnishment and learn your options going forward, we’re here to help.