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Can the IRS Take My Social Security?

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    Yes, the IRS can take a portion of your Social Security retirement or disability payments to satisfy a tax debt. Garnishment is one of the IRS collection tools. The Service can go after a portion of your paycheck, but you might be surprised to learn it can also go after Social Security benefits in retirement as part of its asset seizure efforts. Supplemental Security Insurance (SSI) cannot be taken to pay off back taxes however.  

    As you struggle to pay a tax bill, you have probably watched as penalties and interest increase the total debt and put you even further behind. This lingering debt can easily follow you if you lose a job after suffering a work injury. It may even follow you into retirement. Remedies exist that may resolve the situation.

    Owing tax debt to the IRS means the agency can try to garnish this money from your income or investments, including your regular income, property, and more. That means the IRS can take a portion of your Social Security retirement or disability payments to satisfy a tax debt. Of some relief might be the fact that the IRS generally limits what it takes to 15 percent, so they cannot take everything you get each month.

    How Much Of My Monthly Benefit Can The IRS Take?

    15 percent. Monthly Old-Age and Survivors benefits are levied until the balance owed is paid in full. This can include any penalty and interest amount.

    The Service will not automatically deduct the 15 percent from SSA Disability Insurance Benefits.

    What Notice Will I Receive?

    The IRS will send you multiple letters before taking a portion of your Social Security. A final notice will let you know that the Service intends to start levying your benefits.

    It is crucial to read each and any notice you receive from the IRS. If you have questions, follow up with a tax attorney who may be able to help you avoid a garnishment.

    Do I Have The Right To Appeal?

    Yes, you have 30 days from the date of the notice.

    You can complete Form 12153, Request for a Collection Due Process or Equivalent Hearing. On the form you need to identify why you disagree with the amount due. Some reasons might be:

    • You qualify for Innocent Spouse relief
    • The amount is incorrect and you have not had a chance to dispute it
    • You have entered an installment agreement or are waiting on an offer in compromise

    Thirty days is not a lot of time. Act quickly if you worry the IRS made a mistake (*link to does IRS make mistakes page) or you might qualify for relief.

    Social Security, The IRS & Currently not collectible (CNC) status

    Currently not collectible aptly describes this form of relief – the IRS will stop its collection efforts for the time being if you’re able to attain this status. To qualify, you have to provide evidence that you are not making enough to pay the tax debt and meet your basic needs. The IRS will also evaluate your savings accounts, ensuring you don’t have enough put away to cover your bill.Form 433-F, Collection Information Statement, is the formal way to apply for CNC relief. It can be cumbersome to complete because you must list all your income sources, assets, and expenses. National standards will limit the number of expenses you can claim unless you can prove there are special circumstances.

    The IRS will also assess whether or not you could qualify for an installment agreement by assessing your monthly income and expenses. These agreements allow you to pay off your tax debt over time with a set monthly payment you can afford.

    There are a few more things to note when you’re considering going the CNC route. Each year when you file your taxes, if you receive a refund, the IRS will take this money. The agency may also file a federal tax lien if you owe more than \$10,000.

    Your taxes and penalties may be written off after 10 years if your situation continues to stay the same without improvement. The collection statute of limitations means the IRS loses the power to collect the debt after 10 years.

    Trying to understand all these moving parts can be a challenge, especially when you’re already stressed because of tax debt. Talk to a tax professional before taking steps forward to make sure you’re doing the right thing with the IRS to resolve your issue.

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    Increasing all the while

    While under the protection of CNC, you will not have to worry about the IRS taking your Social Security. But the balance on what you owe will increase as this status does not stop interest and penalties from accruing.

    Every couple of years the IRS will review your situation to determine whether your situation has changed. This means that many times your financial situation improves you need to contact the IRS to negotiate a payment plan or possibly an offer in compromise.

    Because each situation is different, it is important to speak with a tax attorney before filing for CNC status. There may be a better option, such as an OIC which could be a more comprehensive solution. There is a little bit of good news here. Social Security benefits are immune from garnishment from a wide variety of debts

    If you have outstanding credit card debt or medical bills, your social security benefits are safe.

    There is a little bit of good news here. Social Security benefits are immune from garnishment from a wide variety of debts. If you have outstanding credit card debt or medical bills, your social security benefits are safe.

    If you owe the government, however, there is not the same level of protection. The up side here, is that even Uncle Sam is not able to take 100 percent of your social security payments.

    Here’s what you’ll want to know about what the government can take from your social security benefits.

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    It starts with who you owe

    The amount the government can take from your social security payments depends on who you owe. There are a few debts that give the government the ability to garnish your social security benefits, including:

    • Federal income taxes
    • Federal student loans 
    • Debt owed to other federal agencies (other than taxes)
    • Defaulted federal home loans
    Penalties Social Security

    What The IRS Can Take

    While the IRS is not able to take all your Social Security benefits, they can take a portion each month until the debt is paid. For back taxes, for example, the IRS can take up to 15 percent of your Social Security benefits. They cannot take benefits paid to your children or lump sum death benefits, though.

    Through the Federal Payment Levy Program, the government can garnish your Social Security payments until the tax debt is paid. This program was put in place in 2000 to allow the IRS to collect overdue taxes from qualifying federal payments, including Social Security.

    There is a little bit of good news here. Social Security benefits are immune from garnishment from a wide variety of debts. If you have outstanding credit card debt or medical bills, for example, your Social Security benefits are safe from those creditors.

    Supplemental Security Income

    There’s also good news for those who receive Supplemental Security Income (SSI). No matter what the debt, SSI is off-limits for IRS collections. While this may not solve all the problems of having Social Security benefits garnished, it can still be useful as you are navigating getting on top of your tax debt.

    What the IRS can garnish from you depends on your financial situation, the types of debt you have, and the type of federal benefits you receive. Remember that you have options if you’re unable to afford your tax debts, and a tax professional can help you make sense of it all.

    Contact Us

    Get a Tax Expert on Your Side

    A tax law professional can provide the legal guidance you need if you’re wondering whether the IRS can take your Social Security benefits. The team at Silver Tax Group is ready to listen to your concerns, understand your situation, and come up with a plan. Dealing with the IRS can be overwhelming and scary, but we are here to help you along the way.

    We assist clients with a wide range of tax issues, including emergency taxes, tax debt, litigation, and more. Reach out to our experienced team to speak to a tax expert about what the IRS can take if you are dealing with tax debt.

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