There are a lot of things that can happen when you fall behind on your taxes. One of these is having your wages garnished, which can be a uniquely serious effect on your finances, even compared to other types of penalties levied by the IRS and state tax authorities. In case you’re unfamiliar with the concept of wage garnishment, this is a levy which involves the tax authority in question seizing your entire salary other than a particular IRS and state wage garnishment percentage which is exempt under IRS and state wage garnishment laws.
The exact amount of this exemption depends on a few different factors, including the cost of living where you reside, how often you’re paid and the number of exemptions which you claim on your W-4. It doesn’t matter how much or how little you earn, you’re not going to be left with very much after the garnishment (as little as a few hundred a week, even if your usual earnings are far greater). There are other ways to satisfy your tax liability, fortunately, the preferable option being an installment agreement which allows you to pay what you owe over a period of one to three years. Depending on your circumstances, it’s just possible that you might want to think about garnishment rather than installment plan if it can help you to repay your back taxes more quickly.
Now if you have reached the point where your wages are being garnished, you can contact the IRS or state Department of Revenue to request that the garnishment be removed. If you can pay your back taxes in full, you can opt for this, but since it’s likely that this won’t be an option if your wages have been garnished, you may be given the option of applying for an installment agreement (you’ll need to file Form 433-A or 433-F). These forms are used to determine how large of a monthly payment you can afford to make towards your liability and include information about your income, living expenses and other liabilities.
Keep in mind that the IRS and state tax authorities aren’t particularly concerned about you maintaining your lifestyle. For instance, the IRS doesn’t care that you like where you live; they’ll urge you to sell your home or find a less expensive rental situation. You may want to get the advice or representation of a tax attorney or CPA at this point, since they may be able to help you negotiate a settlement where you can claim higher living expenses towards your installment arrangement settlement.
You can find yourself having your wages garnished without having to go through administrative court proceedings, but you can challenge a garnishment based on your income and employment status. It’s important to do this as quickly as possible in order to give yourself the best possible chance of being successful in your challenge, since garnishment will begin 30 days after you receive a notice. Regardless, if you want to challenge your garnishment, you’re going to want the assistance of a professional who is well versed in IRS and state wage garnishment laws to make sure you can make good on what you owe without causing even more serious financial harm.
Have more questions? The Your Tax Clinic Team is more than happy to help! Call us now for a FREE Tax Solution Consultation (855)220-0770