Can the IRS Take My Social Security?

Chad Silver

Chad Silver

Managing Partner of Silver Tax Group, author of the book "Stop the IRS". Practicing a variety of tax issues, regulations, laws and rights. Specializing exclusively on tax matters involving IRS audits, negotiation, settlements & compromises.

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Yes, the IRS can take a portion of your Social Security retirement or disability payments to satisfy a tax debt. Of some relief might be that fact that the IRS generally limits what it takes to 15 percent.

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. In this blog post, we will discuss currently not collectible status. In an upcoming post, we will cover the requirements for an offer in compromise (OIC).

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

This name aptly describes this relief – the IRS will stop its collection efforts for the time being. To qualify you have to provide evidence that you are not making enough to pay the tax debt and meet your basic needs.

Form 433-F is the technical 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 amount of expenses you can claim unless you can prove there are special circumstances.

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 year 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.

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.

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

What they 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 payed. For back taxes, for example, the IRS can take up to 15 percent of your benefits.

Through the Federal Payment Levy Program, the government can garnish your social security payments until the tax debt is payed.

Supplemental Security Income

There’s 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. A tax law professional can carefully examine your situation and provide the legal guidance you need to successfully navigate your IRS tax matter.

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