Payday is the day of the week that everyone looks forward to. Unless, of course, you owe back taxes, and the IRS resorts to one of the dirtiest tricks in its collection action playbook: Garnishing wages. Wage garnishment by the IRS can turn the one day that you're looking forward to into a day of dread.
IRS Wage Garnishment: How Much Can They Take?
When you see half of your paycheck disappear of course you're angry that the IRS thinks they can take your money. But when you owe back taxes, your money becomes Uncle Sam's money.
How can the IRS take money out of people's pockets? Especially when it knows people can't buy new school clothes or school supplies for their kids because of the garnishment.
The IRS only sees a debtor as a target. Even if you don't earn a paycheck, if you survive on Social Security or disability, the IRS can garnish that, too. In fact, the IRS can garnish up to 15 percent of Social Security and up to 85% of your net pay!
How Can You Avoid IRS Wage Garnishment?
The IRS gives people ample warning so the wage garnishment shouldn't have happened in the first place. But now that you are getting garnished and you need some kind of relief, here are a few tips to get the IRS out of your pocket.
- Enter into a payment plan with the IRS.
With a payment plan you make a monthly payment to the IRS. As long as you pay this amount on time each month, your wage garnishment will be lifted. The bad part is that the IRS determines what your payment will be. - Negotiate for a settlement with the IRS on your own or with the help of a tax professional.
While negotiating with the IRS, collection activities are put on hold until a resolution is reached. Once your settlement has been accepted or denied you're back in the danger zone, but as long as you live up to the terms of the contract you should be fine. - Take Action.
It is important to take action as soon as you know you owe the IRS money. The number one reason someone is targeted for a wage garnishment is they put off doing anything about their debt.
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