What to Do If the IRS Garnishes Your Wages

People most often owe extra taxes because they underreport their income. However, if you think underreporting will stop you from paying, you’re wrong. Not only will the IRS come for the taxes you owe, but the agency can garnish your wages if you don’t pay up.

In this video, we’ll go over what to do if the IRS garnishes your wages.

1. Make Payments

Did you receive a paycheck that reflects only a fraction of your take-home pay? Then the IRS has begun garnishing your wages.

If you don’t want the IRS to take money out of your paycheck, pay your tax bill. The answer is that simple. If you have the cash or the opportunity to take out credit, pay up.

When the IRS garnishes your wages, you pay more than back taxes. You also pay current tax, plus the interest and fees associated with the amount you owe.

Garnishing your wages is expensive for the IRS, so it levies the highest penalties on those who force it down this route.

2. Demonstrate Financial Hardship

The IRS can take more out of your paycheck than any other creditor. You could be left with only enough money to pay necessary bills like your mortgage and car payments.

If the levy against your wages is causing you severe financial hardship, get in touch with the IRS and tell them.

You can call from 8 a.m. to 8 p.m. during the week, but be prepared to explain why quick action is so necessary.

Should you be successful, the IRS can lift the order to ease immediate economic hardship. Doing so, however, will not eliminate the debt.

Instead, your wage garnishment will transform into a payment plan that you must pay, or you could face wage garnishment again.

Remember, the IRS wants you to repay your tax debt, and the agents will work with you to make sure you do. Be open and honest with the IRS to get the best result.

3. Change Jobs

Wage garnishment applies to any job you or your spouse has in the United States if you file jointly.

Some people find they achieve temporary relief by quitting their current job and finding a new one.

Changing jobs doesn’t mean you’re in the clear, however. It takes the IRS a few weeks or months to initiate a new order for your new job. Eventually, the IRS will find you again.

Moreover, the amount you owe after a few months of nonpayment will grow substantially thanks to interest and fees accrued during that period.

4. File for Bankruptcy

Bankruptcy is a nuclear option, and you shouldn’t take it unless you’re ready to wipe your credit and assets in one fell swoop.

You should not file bankruptcy for a debt you can pay off in a year or two.

One of the common misconceptions about bankruptcy is that it eliminates all your debt. Debt elimination companies hope you might believe that, but it isn’t entirely true.

You will still owe a tax debt after a Chapter 7 bankruptcy. You will have to repay it in full after Chapter 13.

It is not impossible to eliminate some of your tax debt using bankruptcy. To do so, you need to meet all of these conditions:

• No evidence of fraud.
• No evidence of tax evasion.
• Your debt is three years old.
• All tax returns are filed on time.
• The IRS assessed the debt 240 days before filing for bankruptcy.

If you don’t meet each condition, then the court will keep your tax debt intact.

Additionally, even if your personal income tax debt disappears, any tax liens remain in place.

Conclusion

Are you struggling to negotiate with the IRS? No matter where you are in the process, you can benefit from professional advice.

Get in touch today to learn how to resolve even the most painful tax problems.

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