What is a Wage Garnishment?
If you have unpaid taxes, the IRS often resorts to wage garnishment as a means of collection. This court-authorized procedure obliges your employer to deduct a specified portion of your earnings and remit it to your creditors until the debt is settled in entirety.
Wage garnishment poses a significant financial strain, potentially leaving individuals with minimal disposable income. It’s a legitimate tactic employed by the IRS regularly. For those already living hand-to-mouth, wage garnishment can be particularly devastating. However, there are avenues to explore for lifting IRS tax garnishment and potentially alleviating your tax burden.
What amount of money does the IRS seize?
It’s not rare for the IRS to garnish 70% or more of your wages, with no set limit on how much they can take. Instead, they determine an exempt amount based on your filing deductions and status. Using a specific tax-based formula, they calculate the portion of your income you need for living expenses. The remaining balance is then applied toward your debt.
IRS tables outline the exempt portion of wages, varying depending on factors like filing status and claimed exemptions. For instance, a single individual with one exemption paid monthly might retain just $845.83 from a $5,000 monthly income. Similarly, a married couple with six exemptions might keep around $3,000 monthly.
As these examples illustrate, IRS wage garnishments often leave individuals with minimal income, potentially exacerbating financial hardships.
What steps can you take to halt an IRS wage garnishment?
The crucial takeaway regarding wage garnishment is that it’s far easier to prevent than to halt once initiated. If you anticipate a possible wage garnishment, it’s advisable to promptly contact the IRS to arrange a repayment plan.
However, if you find yourself subject to a wage garnishment, you’ll require an IRS Wage Garnishment Release to cease it. You have three primary avenues to pursue for this release:
- Pay your taxes in full.
- Establish a repayment arrangement with the IRS.
- Pursue an Offer in Compromise.
Of these options, the Offer in Compromise is often preferred due to its potential for significant savings. It involves the IRS offering a considerably reduced payment amount based on your inability to afford the current tax liability.
While appealing, securing acceptance for an Offer in Compromise is exceptionally challenging. The eligibility criteria are stringent, requiring proof of financial hardship such as job loss or substantial medical expenses. Moreover, if approved, adherence to the agreed-upon payment is imperative, as failure to comply will revert to the original tax liability.
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