Frequently asked questions about wage garnishments
If you’ve received notices in the mail that IRS wants to garnish your wages due to tax debt related to your federal tax liability, you probably have a lot of questions about why this is happening and how you can stop it. An IRS wage garnishment is a collection practice the IRS uses to notify your employer to send a portion of your earnings directly to the government as payment for your tax penalties or tax liability (back taxes).
For those who move around a lot or forget to update their address with the IRS, the first time they may even become aware of a tax bill is when their employer notifies them of the deduction from their earnings for the IRS levy. This can be an embarrassing situation at the very least, but the problem at hand can spiral out of control if action isn’t taken soon enough.
You can act now by becoming more aware of the basics of an IRS wage garnishment and how it can affect your life. Then, reach out to our qualified tax attorney at Damiens Law Firm, PLLC for help with challenging the IRS’ levy against you or claiming valuable income exemptions that can protect you from further financial hardship.
Can the IRS garnish wages?
Yes. Wage garnishment is a legal tax liability collection tool that both the IRS and private creditors can use. If you are subject to a wage garnishment for back taxes, including unpaid tax penalties or liability, the IRS or creditor will seek payment by instructing your employer to directly pay them a certain amount of your earned wages.
If you have a spouse, the wage garnishment could affect both of you and cause financial hardship since it doesn’t differentiate between your take-home pay. However, if you are responsible for paying child support or alimony to someone else, that debt will be subtracted from your entire paycheck. When your employer receives an official notice from the IRS.
Also, your actions to remove a wage levy will depend upon if it is this IRS or State that is garnishing your wages. Another consideration is what portion of the liability is penalties and interest vs. income taxes.
How much per month can IRS garnish wages?
When the IRS sends a final notice of intent to levy indicating they want to garnish your wages, there are a few questions that are probably running through your mind. It depends on your circumstances. When the IRS wants to garnish your wages from each paycheck will be released in accordance with federal law and how much you owe, as long as they’ve sent a final notice of intent to levy. We often get asked, how do I stop IRS wage garnishments, and what is the maximum amount the IRS can garnish from your paycheck? Generally, the IRS will take 25 to 50% of your disposable income. Disposable income is the amount left after legally required deductions such as taxes and Social Security (FICA).
There are exceptions to this rule, however, that could protect some or all of your earnings from wage garnishment. Contact our tax attorney at Damiens Law Firm for more information about ways to stop wage garnishment.
How much do you have to owe before the IRS garnishes wages?
The IRS will first send you several notices, called bills, demanding payment. If you don’t respond to these bills or make arrangements to pay your liability, the IRS will escalate the matter by sending a notice. The amount though may vary. It would be unlikely the IRS would garnish a wage for a nominal amount of money.
Can the IRS garnish my wages if my husband owes taxes?
If your spouse owes back taxes, the IRS may garnish your wages to collect payment on their liability if you filed a joint tax return. If you filed individually, the IRS would not come after your wages for the balance due. But they can levy a joint bank account if your wages are deposited into this account.
Does the IRS need a court order to garnish your wages?
No. While your credit card company, mortgage lender, or another private creditor would need to take you to court and get permission to garnish wages, the IRS does not. You can, however, expect to receive sufficient communication from the IRS before it begins garnishing your wages. This is delivered via mail as a final notice of intent to levy or as a threat of a federal tax lien.
You may be able to stop the IRS from withholding your wages; however, you will have to request a hearing or enter into a payment plan. Contact a tax attorney at Damiens Law Firm immediately if you would like assistance with getting an emergency hearing so we can help you get this levy released or if you would like to discuss payment plan options.
Is an IRS wage garnishment the same as a tax levy?
No. Unlike an IRS wage garnishment, a tax lien or levy freezes assets and bank accounts of yours that are over $50,000 while the government seeks payment for taxes owed. If you’re facing an IRS tax levy against your bank or assets, it’s probably too late to act on your own and expect results. In this instance, contact our tax attorney immediately to discuss your options.
If, for whatever reason, you’ve been unable to get your wage levies stopped by contacting the IRS on your own and need an experienced attorney, we can help. Contact us today to set up a free initial consultation. We will walk you through what’s happening as it happens from a tax professional.
How much of my income can the IRS take?
There is no standard percentage of what can be garnished per pay period or per week, but the IRS may be permitted to take a little more than private creditors could. The amount of money the IRS can take from your paycheck per pay period via an IRS wage garnishment is the result of a complicated calculation that determines how much of your income is exempt from wage garnishment. The non-exempt portion may be claimed entirely by the IRS. This will also depend upon your filing status (single, Married filing joint, Married Filing Separate, or Head of Household) as well as the number of dependents on your tax return.
How do I find out if the IRS is garnishing my wages?
If the IRS is garnishing your wages, you will receive a notice in the mail advising you of the wage garnishment and how much is being taken out of each paycheck. If you have questions or need help stopping the garnishment, contact our tax attorney at Damiens Law Firm for assistance.
Are there any exemptions available?
Yes. Although it’s more difficult to provide a clear answer as to how much the IRS can garnish from your wages since it varies based on your financial and tax situation, the amount that can be claimed as exempt is a little more discrete.
The following portions of income can be claimed as exempt from wage garnishment:
- About $12,200 annually for individuals filing as singles without any dependents
- About $26,650 annually from a head of household’s income with two dependents
- About $32,700 annually from married persons jointly filing with two dependents
These values reflect exemptions for the tax year 2019 and are likely to shift year to year. Regardless, these figures can provide a rough estimate of what to expect so you can budget accordingly.
If I earn a bonus at work, will I get to keep it?
Probably not. Bonuses, commissions, fees, and other types of compensation can all be garnished from your paycheck. If your bonus is not exempted from wage garnishment, it can be claimed by the IRS in its entirety.
How often and for how long will the IRS garnish my wages?
As a continuous tax levy, you can expect the IRS to garnish your wages from every paycheck until your tax liability is satisfied or you take other actions to comply with the IRS.
A wage levy can stop – even if you still owe taxes – if any of the following occur:
- The IRS must stop collections if the liability is paid in full
- The IRS accepts a payment plan agreement that will whittle away at your tax liability over time
- You can prove that wage garnishment is causing financial hardship and/or economic hardship
- You file an offer in compromise, which is an agreement with the IRS to settle a tax liability for less than what’s really owed. You should be aware that filing an offer in compromise will suspend the statute of limitations for the IRS to collect your tax liability. This means you need to be sure you qualify; otherwise, you’re just extending the time period in which the IRS has to collect the tax liability.
- You file for bankruptcy
- You can prove in tax court that the wage garnishment against you was done in error or as a violation of the law or the IRS’ own procedures
- It’s worth noting that if you owe money and have not filed a tax return or have multiple tax returns due, these must be completed before you contact the IRS. The IRS will not offer any liability relief for tax liabilities until you have filed the past due tax return.
Exactly how will the IRS notify me of wage garnishment?
The IRS will send a series of at least three notices to your last-known address before it engages in wage garnishment.
Wage garnishment can be a scary experience for taxpayers who don’t understand the process and what to expect from an IRS wage levy. Having a tax attorney explain your options is essential, considering you only have 30 days to request an administrative hearing if you’re facing wage garnishments.
I’ve received a notice about wage garnishments. What should I do?
First, don’t panic – many people receive wage garnishment notices from the IRS when they aren’t really in danger of having their wages taken from them. If you’re served with a notice that your wages will be garnished, contact our tax attorney immediately to begin preparing your defense.
In order, these notices will include:
- A demand for payment (CP14, CP501, CP503)
- A notice of intent to levy (CP504)
- A notice of your right to a hearing for due process collection (LT11/Letter 1058), which will be sent via certified mail
After your receive an LT11/Letter 1058, you can expect the IRS to begin garnishing your wages two weeks after your deadline to request a hearing has elapsed.
Do I have a chance to fight against wage garnishment?
The LT11/Letter 1058 will have information about how you can ask for a hearing to request a payment agreement for your unpaid taxes or to challenge the IRS’ assertion that you owe anything at all. The hearing must be requested within 30 days of the notice date. Wage garnishment will take place about two weeks after this deadline.
How much do you have to owe IRS to go to jail?
It is unlikely that you will go to jail for owing the IRS money unless you have deliberately tried to avoid paying your taxes or have committed tax fraud. However, if you fail to file a return, fail to pay taxes owed, or commit perjury, you could be subject to criminal charges. If convicted, you could face jail time or monetary penalties.
What do I do when I start receiving these notices from the IRS?
If you receive any notices from the IRS threatening wage garnishment or a tax levy against you, consult with a tax attorney or other tax professionals as soon as possible. These professionals are uniquely qualified to handle this serious legal and financial problem. Many people don’t know how to deal with the IRS when they’re faced with a problem like this, which can make their situations more stressful and even worse.
How we can help
If, for whatever reason, you’ve been unable to get your IRS levies stopped and need an experienced attorney or tax professional, we can help. Worth noting that depending upon your situation, an attorney may be a better course of action due to the privilege of protection once there is an attorney-client relationship. Contact us today to set up a free initial consultation. We will walk you through what’s happening as it happens from a tax professional.
At Damiens Law Firm, PLLC, we work with clients like you who have faced tax-related wage garnishment from the IRS. No one wants to be in this position, but it can be made easier by having tax professionals in your corner, speaking to the taxing authorities, and making sure you are being fairly treated by the IRS when it seeks a tax-related wage garnishment. What is a Tax Lawyer, and what are their responsibilities? We can help you claim exemptions or review the underlying reasons why you’re facing a wage levy to ensure your interests and financial well-being can be as protected as possible in your unique situation.