Are you in hot water with the IRS? Have your wages been garnished, leaving your paychecks thin at best? Having your wages garnished by the IRS is a terrifying experience. This government notice occurs when the government seizes a large chunk of your income to pay back a tax debt that’s been consistently ignored. If a wage levy has been enforced, know that it will continue until your debt is completely repaid, at rates of 65 percent on both your social security checks and paychecks.
First Things First
If you’ve had your wages garnished, then you’ve already received the government’s Final Notice of Intent to Levy, as these notifications go out at least 30 days before the IRS garnishes your wages. Upon knowledge of a wage levy, be sure you talk to your employer and ask for a copy of the wages levy. There are ways you can lessen the levy while you try to figure out how you can repay your debt in other ways. Hop online, find the appropriate forms, and accurately list your dependents. The more dependents you have, the lesser the levy place on your income as the government will see you’re supporting multiple individuals. If you still have the Notice of Intent to Levy, there will be a number included where you can reach the proper contacts at the IRS. Definitely make use of this. The IRS is willing to work with taxpayers who make plans to settle their debts, and you can start a negotiation that might see you paying less in the long run, especially if you’re being charged hefty penalty fees.
Is My Job in Danger?
It can be embarrassing and frightening to see your paycheck cut in half, but having your wages garnished isn’t necessarily reason for dismissal from your job. In fact, there is an act called the Consumer Credit Protection Act that protects employees from dismissal due to wage garnishment of a singular debt. However, in the eyes of your employer, a wage garnishment could indicate unsatisfactory traits, including irresponsibility.
Your Disposable Income
If you’re behind on paying your taxes and have received a Notice of Intent to Levy, or you’ve already had your wages garnished, you’ll need to get in touch with IRS to work on something called your monthly disposable income. This isn’t always as helpful as it may seem, however, as the IRS’s version of what is “disposable” for you is probably very different from your definition, and there are different categories based on various facets. Payment plans are only available to those who owe less than $50,000. Usually the amount they decide upon is more money than you will be able to sustain over a long period of time. If you can plead your case and show that you have no monthly disposable income, there are circumstances that might see the levy released, but don’t bet on this option.
There are a few options you can pursue if you determine you won’t be able to pay your taxes off in whole, but it’s important that you speak with professional at a company like Community Tax to figure out which will work best for you.
An Offer in Compromise
One of the most commonly touted routes for escaping a wage garnishment is an offer in compromise. This negotiation could see you paying a much smaller portion of your debt than originally owed, but it takes professional help in most cases to be successful. This route requires you to prove you can’t reasonably pay off all of your debt, and you must propose a lesser amount that the IRS will agree to.
Filing for Bankruptcy
It’s a scary word, but sometimes bankruptcy is your best option. If you decide the situation is dire enough to warrant bankruptcy (a decision you should only come after speaking with a financial advisor or some other finance professional), then filing will immediately clear your wage levy. Remember that bankruptcy can have other lasting consequences that may not be more favorable than the original garnishment.
If your wages have been garnished, do everything in your power to resolve the situation as quickly as possible as it can have lasting consequences for your credit and employment possibilities. Make sure you never find yourself in this situation again with proper financial planning and new tactics for saving.