Stop Wage Garnishment
What is IRS or State Wage Garnishment?
The IRS and state department of revenue is just like any other creditor. They have the ability to garnish your wages if you owe a tax debt, however unlike the majority of other creditors the government has the power to garnish your wages without the legal requirement of obtaining a judgment first. In addition, the IRS or state department of revenue is allowed to take far more than most other creditors. Fortunately there are available options that you can take part in that will help you to either avoid, or eliminate the unnecessary financial, and emotional toll that wage garnishment creates.
When the quickly approaching tax season arrives either you or a professional will prepare a tax return. At this point you will either owe money or get a refund from both the IRS and your state tax department. If you happen to owe money than there are multiple ways to pay. If you have the money available than you can simply write a check for the balance owed, send it in with your tax return paperwork, and relax until the next tax season. Unfortunately, many people and businesses simply do not have the ability to pay their yearly taxes in full. Other options to settle your tax debt require exploration. These options include setting up a payment plan, making an Offer In Compromise, as outlined in Chapter 2, or filing bankruptcy if your case in severe enough to justify the impact on your credit. If you do nothing than the IRS and or state department of revenue will take action by initiating the collection process.
Protecting Your Income
The government is in the business of collecting taxes, and certainly takes extreme measure in which to do so. However, they will provide you with adequate notice prior to garnishing your wages. In order to start the process, both the IRS and State are required by law to send you a written notice stating the exact amount of money that you owe them. The notice must clearly spell out all of the charges including the back tax amount, interest accrued, and penalties owed. In addition, the notice is required to provide you with a date that the balance needs to be paid in full by.
If you fail to comply with their terms within the stated time frame, the government has the right to explore how they may enforce you to pay the back taxes owed. This may certainly include the placement of liens on your property, seizure and sale of your assets, keeping future refunds, and of course garnishment of your hard earned wages.
How much is the state and federal government allowed to garnish from your wages?
Ironically both state and federal law limit the amount that most creditors can garnish or take directly from your wages. The tax code limits how much the IRS or State is required to leave for your use. That being said the IRS will take as much as they possible can, leaving you only with the minimum amount that the tax code allows for basic living expenses. The minimum amount of your paycheck that you are allowed to keep is based on the number of exemptions that you claim on your tax returns.
For example, a married taxpayer that files a joint return, is paid monthly, and claims two exemptions will only be allowed to keep $1,625 of their pay. On the other hand a single person that is paid weekly, and claims five exemptions will only be allowed to keep a maximum of $479.81. Any balance over these amounts is garnished, sent directly to the government, and applied towards your back tax balance. If the married person earns $10,000 per month, he or she will only be allowed to keep $1,625, while $8,375 is paid to the IRS each and every month until the balance is paid in full.
Although both the IRS and state department of revenue may only resort to wage garnishment as a last resort, it can happen to anyone that owes tax debt at any time. If you would like to learn more about your rights, and avoid or stop your wages from being garnished by the government, please give the professional team at Alliance Tax Advocate a call today. We are here to help provide you with income tax relief.