How Much Can the IRS Garnish From Me?

The process of the IRS taking part of your paycheck is known as wage garnishment. How much it can take out of your paycheck depends on various factors, including the standard deduction, the number of dependents, and the frequency of your pay periods. The reality is that you end up taking home less than half of your regular wages.

A tax garnishment does not come out of the blue. You will receive several notices prior to garnishment action. What to do if the IRS has filed a tax garnishment? Learn more from Ayar Law.

How Does the IRS Garnish My Wages?

If you owe federal tax debt, the IRS can garnish your wages until the debt is repaid. The IRS sends your employer Publication 1494, which explains how to determine the amount of wages exempt from garnishment. Your employer then provides you with a Statement of Dependents and Filing Status. You have just three days to complete and return this document. Failure to do so means the IRS figures your exempt amount as married filing separately with zero dependents. That subjects you to the highest amount of garnishment permitted. Your employer sends the garnished amount directly to the IRS.

Keep in mind that if you have other sources of income, such as self-employment income, interest, dividends, or rent, the IRS might move any exemptions to the other income sources and garnish 100 percent of your income from a particular employer.

What Is the Wage Garnishment Process?

The wage garnishment process follows strict guidelines. The initial Notice of Wage Garnishment is sent via the mail by the IRS. That notice includes the amount of tax owed, including interest and penalties. A due date for paying off the balance is listed. Pay the balance off by that date and wage garnishment will not proceed.

If the due date passes without payment, expect a second notice from the IRS. Known as the Final Notice of Intent to Levy, it is sent by either certified or registered mail 30 days prior to wage garnishment.

Next comes the Final Notice. The purpose of this notice is to inform you of your right to appeal within 30 days. After that window ends, the IRS starts garnishing your wages.

Can the IRS Garnish My Wages if My Spouse Owes Taxes?

If you are married and filing jointly, the IRS can garnish your wages over taxes owed by your spouse. It can, and probably will, garnish wages from both of you.

However, if your spouse owes back taxes and you filed as married but filing separately, the IRS cannot garnish your wages.

If you believe your spouse is responsible for owing back taxes and you are not, you may file an innocent spouse relief request. You must prove to the IRS that taxes owed on the joint return resulted only from your spouse’s actions. Because you signed the tax return, you must also show that you did not know about the tax owed and had no reason to know.

Learn more about your tax relief options from Ayar Law.

How to Stop Wage Garnishment

Stop wage garnishment by paying the amount of tax owed, or making other arrangements, such as an installment plan to pay overdue taxes. Other ways to stop wage garnishment include:

  • Changing employers–While getting a job with another employer stops wage garnishment temporarily, it is not a long-term solution. Once the IRS finds your new employer, the wage garnishment process starts again.
  • Extreme financial hardship–If you can prove that wage garnishment will prevent you from taking care of your family’s basic needs, you may qualify for an exemption.
  • Offer in compromise– Under this program, the IRS permits settlement of your tax debt for less than the entire amount owed. A legitimate reason for the inability to pay the full amount of tax is required. Use Form 656 to apply. Payment options involve either a lump sum cash payment or periodic payments.

In the worst-case scenario, you can apply for bankruptcy. This is a huge risk, as you do not know the amount of your dischargeable debt. Debt that is not dischargeable still requires payment. Those who file for bankruptcy are not eligible for an offer in compromise.

How Ayar Law Can Help

When it comes to wage garnishment, time is of the essence. By law, you have just 30 days to request an appeal after receiving the Final Notice before wage garnishment begins. It is vital to consult a tax professional such as the seasoned attorneys at Ayar Law as soon as possible.

We will review your case and determine the best options for you to avoid wage garnishment.

If you received notice of wage garnishment or are experiencing other wage garnishment issues, contact  Ayer Law for a Free Consultation.