It’s payday, and you eagerly check your bank account balance. Imagine your surprise when you see that it’s way smaller than you expected. What happened?
Maybe the IRS garnished your wages. They can take this aggressive step if you owe back taxes and haven’t responded to numerous collection attempts. However, even if you missed these notices and experience a wage garnishment, all is not necessarily lost. You may be able to rectify the situation, beginning with these steps.
How Much Does the IRS Take From Your Paycheck?
Before beginning on fixing the issue, it may be helpful to understand why the IRS has garnished the amount it has. In fact, the IRS calculates how much money it can leave in your paycheck for daily living expenses and necessities, based on your tax exemptions. Here are two examples.
- You’re a single parent with one child, and you file as head of the household. If you earn $1,000 a week, the IRS could take $664.42, leaving you with $335.58.
- You’re married with five kids and file a joint tax return. If you earn $1,500 a week, the IRS can take $788.46, leaving you with $711.54.
Steps to Address Garnishment
File all your back taxes. As long as you’ve missed filing any annual tax returns, the IRS cannot lift a wage garnishment levy against you.
Figure out how much you owe. Knowledge is power, and you can’t fix your situation until you know exactly how much money you owe the IRS.
Pay any back taxes you owe or work out a payment plan. If possible, pay your tax debt in full, or if that’s impossible, consider a payment plan or see if you’re eligible for a temporary “currently not collectible” status, which releases the garnishment for six to 12 months.
Consider filing for bankruptcy. Taxes may not be discharged under a Chapter 7 case and are always due under a Chapter 13 bankruptcy, but it may relieve you of other debt, and therefore your remaining IRS debt will become more manageable.
Talk to a tax expert, such as an enrolled agent. An enrolled agent can analyze your liability, and work with you and the IRS to negotiate a reduction of the amount due or create a payment plan.
Wage garnishment is just one way that problems with the IRS can affect your life. Consider contacting Highland Tax Group at 720-398-6088 to put an end to your IRS wage garnishment and resolve your tax issues once and for all.