IRS Tax Wage Garnishment, Guide to Your Garnished Wages
What Is an IRS Wage Garnishment or Levy?
A wage garnishment is a specific type of tax levy where the IRS takes money directly from your paycheck. This is one of the most common levies the IRS uses, and it is incredibly serious. Wage garnishments continue until the IRS collects the tax debt plus interest and penalties, you make payment arrangements with the IRS, or the statute of limitations expires on the debt.
Types of Payments the IRS Can Garnish
The IRS can garnish your wages including commissions and bonuses. If you are self-employed or an independent contractor, the IRS cannot garnish wages from an employer. However, the agency can seize rental income, accounts receivables (money your clients owe you), and funds from your bank account as well as other property.
Your Employer’s Role in Wage Garnishment
If the IRS decides to levy your wages, it will send Form 668–W(ICS), Form 668-W(C)DO, or a similar notice to your employer. The notice explains the garnishment process to your employer, and it includes guidelines on how much your employer should take from your check.
After receiving the garnishment notice, your employer should give you a Statement of Exemptions and Filing Status. This form requires you to note if you file single, married filing jointly, head of household, etc and your number of exemptions. For example, if you are married with one child, you generally claim three exemptions. You must return this form in three days. If you don’t return the form, the IRS assumes you are married filing separately with one exemption.
Based on your filing information, your employer uses Publication 1494 to determine how much to withhold. This publication allows you a certain amount of money for basic living expenses. For instance, as of 2018, if you are single with one exemption, you get $40.96 per day in take-home pay. If you are married filing jointly with five exemptions, you get to keep $129.81 per day. Your boss has to send any amounts over these thresholds directly to the IRS.
If your employer fails to send the demanded amounts, the IRS holds your company or responsible person personally liable. As a result, employers almost always comply with these demands. Note that it is illegal for your employer to fire you over a wage garnishment, but if you have two separate entities garnishing your wages, your employer may be able to dismiss you legally.
Child Support and Wage Garnishment
The IRS does not garnish wages earmarked for court-ordered child support. If those amounts are already being withheld from your paycheck, your employer automatically takes them into account when calculating how much to send to the IRS.
If you pay your child support on your own, you should contact the IRS directly. Ask your employer for the phone number from the letter they received. The IRS will allow you to keep those extra funds to make your support payments, but then, you cannot claim an exemption for that child.
How Long Does an IRS Wage Levy Last?
The IRS will continue with the garnishment until all of the taxes, penalties, and interest have been paid back in full. If you don’t make some other arrangement with the IRS, they will take the maximum amount allowed by law. The IRS uses wage garnishments as a last resort to collect on taxes owed after multiple notices have been sent with details on how to make other arrangements with the IRS on ways to pay. Generally, you can pay less per month or even nothing if you work with the IRS on other alternatives.
The IRS follows a set process when setting up wage garnishments. If the IRS does not follow the required steps, you can appeal and get the garnishment removed. If you are being threatened with a garnishment or if your wages are already being garnished, you should check out this link to learn about the rules and laws.
There are a number of ways to stop a wage garnishment. The most effective way is to make payment arrangements with the IRS. You can also declare hardship or take other steps to pause the garnishment or negate its effects.
You can appeal a wage garnishment when the IRS sends you a letter of an impending levy. You can also appeal the garnishment once it is in place. The process is the same that you use to appeal all other types of IRS levies.
A wage garnishment is a serious issue. To avoid or stop a wage garnishment, you should get professional help. Our tax professionals can help you to find a solution for your tax debt. To learn more about the process, follow this link.
Wage Garnishment Release & Help
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