What Is Wage Garnishment?
Wage garnishment is obtaining money from your salary before you are paid. You probably have trouble paying a creditor if you’re facing wage garnishment. Your employer will deduct money from your salary to pay this creditor. The IRS can garnish your wages to settle your tax obligation if you have a tax lien for unpaid taxes.
IRS procedures before garnishment
When the IRS assesses your tax, you will often get a notification and a Demand for Payment of the amount owed. If you do not pay this invoice, you will get a Final Notice of Intent, probably a levy.
These latter two documents must be submitted at least 30 days before the IRS begins garnishing your pay. Before it gets to this point, you should contact the IRS and try to fix the matter by requesting a payment plan.
How much can the IRS garnish from my salary?
When the IRS garnishes your earnings, your employer has no choice but to cooperate and submit a portion of your income to the agency to satisfy your tax due. The IRS has more garnishment authority than typical creditors since it is not bound by state and federal garnishment limits, which means it may leave you with very little money to survive each week.
In 2021, for example, a single parent with two children who file as head of household might be left with as low as $526.92 per week. This implies that if you make $1,000 per week, the IRS will take $473.08 of it, and if you earn $2,000 per week, the IRS will take $1,473.08. However, the IRS is not allowed to cause financial hardship, and it’s in their best interest to make arrangements with the debtor.
In many states, The amount that judgment creditors may deduct from your paycheck is capped by federal law. A capped amount that may be garnished is 25 percent of your disposable weekly earnings or the amount by which your disposable weekly earnings exceed 30 times the federal minimum hourly rate, whichever is less.
What about job safety?
You may not be fired or discriminated against because your earnings were garnished to pay off a single debt. The more garnishments you have, the less protection you have. Under federal law, you are not shielded from retaliation if more than one creditor has garnished your pay—or if the same creditor has garnished your earnings for two or more debts. Some states provide additional protection. The IRS does not care how long you’ve been employed or whether you were fired. It only cares about what you earned during the year. In other words, if you made $10,000 last year and owe $5,000 in , the IRS can still garnish up to $500 monthly from your paycheck until the debt is settled.
If you are unemployed, however, there are dire consequences to having tax debt, which could result in interest, penalties, and debt repayment. Therefore, always contact a tax professional as soon as possible to ensure the best possible outcome to rebuild your financial well-being. Historically, the IRS has been very forgiving with tax debt and legally obliged to prevent financial hardship.
How to Stop IRS Wage Garnishment
Having your can impair you financially and cause difficulties in debt payments. Therefore, there are specific options that the IRS provides when somebody is in tax debt. For example, the IRS initiated the fresh start program to help people with debt make arrangements to pay it off. For example, the IRS could make an offer in compromise, meaning that a share of your debt may be lifted. In less extraordinary cases, the IRS will offer payment plans ranging from one to six years. Some processes at the IRS are rather complicated, and we strongly suggest contacting one of the tax professionals at Idealtax.com. They will be able to help you get back on track with your creditors.
How a wage garnishment case is resolved varies by state, so it’s important to talk to a certified tax specialist to discuss your situation and options. However, there are a few predicted outcomes of wage garnishments:
- Some garnishment notifications may expressly include an end date, irrespective of the total amount.
- A wage garnishment may result in a termination notice for an employer.
- IRS can use wage garnishment to pay off an employee’s debt.
If these milestones are met, businesses should cease removing the garnishment from employees’ wages and resume average remuneration.
Offer in Compromise
To elaborate, An is an arrangement between taxpayers and the IRS that resolves a taxpayer’s tax liability for less than the amount owed. In most circumstances, taxpayers who can ultimately pay their bills through an installment plan or other methods will not be eligible for an OIC.
Get help from a tax professional
Speak with one of our tax professionals if you are concerned about money or debt. Seeking legal assistance as soon as possible helps you get the best possible conclusion for your case. If you are in debt, your creditor may mail or call you to demand payment. Furthermore, you may be hauled to court and have your wages garnished. In some exceptional circumstances, the IRS may even levy any of your property or any other kind of security. The numerous outcomes make determining if your situation is severe challenging, and it is vital to consult a tax specialist for the best potential outcome.