Do not take on the IRS by yourself.
Have you received an IRS wage garnishment notice? The IRS and State tax authorities can seize your assets, garnish your paycheck, and levy your bank account. They can be the most brutal collection agency on our planet. Furthermore, a tax lien may be filed against your property. While this no longer negatively affects your credit score like in the past, it can make it nearly impossible to pay off other debts, secure a loan, seek financing, or invest in your business. To make it worse, they charge you a ton in penalties and interest, and make you feel hopeless.
Don’t give up! This is still America! You have rights!
Our seasoned staff of top notch IRS wage garnishments attorneys, CPAs, and enrolled agents will fight vigorously to protect your assets. We know what needs to be done when you receive a wage garnishment notice. Rush Tax Resolution will work to negotiate the very best and the very lowest possible resolution with the IRS and State, as allowed by law.
Wage garnishments are one of the tools the IRS and various state tax authorities can use to leverage taxpayers into a payment agreement or settle their debts through additional withholding with an employer’s help. The IRS and state tax authorities don’t just garnish your wages out of nowhere – there are multiple notices and letters required to forewarn a taxpayer before garnishment or any other form of financial levy begins. But even so, it’s not the end. There’s still time! You can reverse the IRS’ decision and settle your debt while potentially paying less. It’s all about working with the right people.
Often, the IRS or State will require you to file any missing tax returns in order to release any IRS wage garnishments or levies. This can often be very difficult for a taxpayer to do quickly on their own. With our own in house tax preparer, we can often same day E-File 2013, 2014, and 2015 returns. Also, if you are missing a bunch of older years, we can help you as well. Our staff of Attorneys, Enrolled Agents, and CPAs can help you gather and organize all of the old information, and help you file any return, no matter how old it is.
When Do IRS Wage Garnishments Occur?
A tax debt with the IRS or any other state tax authority is never taken lightly – but if you have just recently received a notice about your ongoing tax debt, you won’t have to worry about wage garnishment just yet. The IRS does not immediately resort to wage garnishment the moment a taxpayer is behind with some of their payments.
If you owe the IRS money, they will first send you a notice of an outstanding tax liability, along with an important tax assessment date, which clarifies the date when the IRS discovered your debt. That date also determines the point at which your tax debt expires after ten years. The closer your debt gets to that ten-year mark – and the larger your tax debt – the more the IRS will get aggressive about pursuing your tax liability.
It’s clear that the government wants their money. But they won’t shake you down to the last dime. Your wages are garnished based on factors like your current income and filing status, as well as the number of dependents that live with you, and live off your paycheck. The less you earn, and the more people you provide for, the less money the IRS will take. Of course, the inverse is also true. The more you earn, the more the IRS will skim off the top to pay your tax debt. Depending on your individual circumstances, the IRS might take as much as 70 percent of your gross income in a month!
The IRS’ exemptions change every year and depend on whether a salary is being paid daily, weekly, biweekly, semimonthly, or monthly, as well as the number of dependents and the filing status. A single filer with no dependents will have far less income exempt from garnishment than the head of a married household with six kids to feed.
Wage garnishment is only an option if you’re employed. The IRS doesn’t come to you for your money but goes directly to your employer. Much like regular tax withholding, the money is taken out of your paycheck before you receive it. Furthermore, your employer will receive a notice of your wage garnishment. You and your employer have two weeks to respond before the IRS will start claiming money from your paychecks.
Self-employed taxpayers need to pay off your debt in other ways. If wage garnishment is not an option, and the IRS or other state tax authorities decide to rely on a physical claim of your cash, they will consider levying a bank account, or an investment property.
The exact amount the IRS draws from each paycheck depends on your filing status and the number of dependents you support with your paycheck. Exemption amounts are calculated based on a person’s filing status and dependents, as well as the frequency in which they are paid. The IRS can easily take over 70 percent of every paycheck, especially if your income is on the higher side.
As a quick example, let’s say that a taxpayer with a significant tax debt is being warned by the IRS about wage garnishment. This taxpayer in question is a single filer and has one dependent who relies on them. If they are paid monthly, then the total amount of money this taxpayer can put aside in 2022 is $1445.84, regardless of what state they live in. In some states, this can be enough to continue to pay for rent and necessities – in other states, an exemption this low can be frustratingly difficult to live off of.
Thankfully, you have some recourse. If the IRS’ decisions to garnish your wages are causing you significant financial distress, then you can seek legal help to appeal your wage garnishment and come to a different agreement with the IRS.
The IRS has an exemption table allowing you to calculate your own wage garnishment exemption amount, and it is updated every year.
How Much Will the IRS Garnish?
The exact amount the IRS draws from each paycheck depends on your filing status and the number of dependents you support with your paycheck. Exemption amounts are calculated based on a person’s filing status and dependents, as well as the frequency in which they are paid. The IRS can easily take over 70 percent of every paycheck, especially if your income is on the higher side.
As a quick example, let’s say that a taxpayer with a significant tax debt is being warned by the IRS about wage garnishment. This taxpayer in question is a single filer and has one dependent who relies on them. If they are paid monthly, then the total amount of money this taxpayer can put aside in 2022 is $1445.84, regardless of what state they live in. In some states, this can be enough to continue to pay for rent and necessities – in other states, an exemption this low can be frustratingly difficult to live off of.
Thankfully, you have some recourse. If the IRS’ decisions to garnish your wages are causing you significant financial distress, then you can seek legal help to appeal your wage garnishment and come to a different agreement with the IRS.
The IRS has an exemption table allowing you to calculate your own wage garnishment exemption amount, and it is updated every year.
What About Self Employment?
If you earn a paycheck, the IRS can garnish that paycheck – but if you manage your own business, chances are the IRS may take a different approach to levying your funds. Instead of going through your employer (or in other words, you), the IRS can access your funds directly, and drain your bank accounts.
The IRS may pull just as much as they need, in which case they will contact the bank in question and make them freeze your account for the amount they intend to withdraw. This means that if you owe upwards of $3,000, the IRS will ensure that the amount you owe will remain in your account for when the IRS makes its withdrawal, while allowing you to access the remainder of what you have.
If the IRS cleans out a bank account in its entirety, they will send the remainder back. Similarly, the IRS can also levy property instead of accounts. If the IRS grabs one of your rental homes or investment properties, or even your private vehicle, it will calculate its quick sale value and use that as a base price for selling it. You have limited time to prepare a defense if the IRS decides to sell your property, so act quickly!
IRS Wage Garnishments Causing a Financial Hardship?
If you are experiencing a financial hardship – talk to our staff about the IRS program called “Currently not Collectible.” This is a program where we can stop the IRS from performing any collections against you, and you will not be required to make any payments at all while experiencing the hardship.
However, in return, the IRS or State may require that a tax lien be filed. Furthermore, filing as currently not collectible will not protect your debt from increasing through interest. In other words, while the IRS will not pursue collection actions against your tax account – like wage garnishment, or a bank levy – you will still be indebted to the IRS. This strategy is often a great short term emergency solution. For a permanent solution, ask us about our free pre-qualification process for the Offer in Compromise program.
Keep in mind that if you do not respond, the IRS will continue to garnish your paycheck, and may also go after other assets.
Don’t delay – don’t have another pay period paycheck garnished.
Call Rush Tax Resolution at (877) 554-7874 to set up a FREE consultation to review the various IRS wage garnishments options.
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