What is a Wage Garnishment?
When you owe taxes, a common way the IRS takes money from you is through your wages. A Wage Garnishment is a court-ordered instruction that mandates your employer to withhold a specific amount of your paycheck and have it sent to your debtors until the liability is paid in full.
Wage garnishment can leave a person with little money on which to live and is a very real and legal tactic the IRS uses every day. If you already live paycheck to paycheck, a wage garnishment would be disastrous. Fortunately, there are options available to you to remove your IRS tax garnishment and maybe even reduce your tax liability.
How Much Money Does the IRS Take?
It is not uncommon for the IRS to take 70% or more of your wages. Unlike many creditors, there is no limit to how much the IRS can garnish from your wages.
Instead, they have an amount calculated for which you are exempt from paying. They have a specific tax-oriented equation they use to determine how much they can take out.
First, they check your previous filing deductions and status (e.g. married filing jointly) to get an estimate on how much you can live off of. Once they figure this amount out, they then take the rest of your paycheck and apply it to your debtors.
The IRS table for determining the amount exempt from levy on wages, salary, and other income specifies the amount left in your paycheck, whether you are paid daily, weekly, biweekly, semimonthly, or monthly. This amount is also dependent upon how many exemptions you claim on your tax return.
There is a separate table for each filing status, including Single, Married Filing Joint Return, Head of Household, and Married Filing Separate.
Based upon these tables, a single person paid monthly with only one exemption will be left with $845.83 in his or her paycheck. Even if this person makes $5,000 per month, he or she will still only be left with this small amount. Or consider this example, a married couple with six exemptions will be left with roughly $3,000 per month.
As these scenarios show, while on an IRS wage garnishment, you will be left with little to live off of.
Typically, this will place you in financial hardship, or make a hardship worse than it already is.
How Can You Stop an IRS Wage Garnishment?
The one take away you must remember about wage garnishment is that it is easier to prevent an IRS wage garnishment than to stop one. If you feel there may be a wage garnishment in the near, it is best to contact the IRS as soon as possible to set up a repayment plan.
However, if you are unlucky enough to receive a Wage Garnishment, you will need an IRS Wage Garnishment Release to stop it.
To get this released, you have three main options:
The most popular of these three is the Offer in Compromise, because of how much money it can save you. An Offer in Compromise is when the IRS offers you a significantly smaller amount to pay based on your inability to pay your current tax amount.
Sounds great, right? It truly does work for those who get accepted; however, it is extremely hard to obtain.
The eligibility process is rigorous; as you have to prove financial hardship via job loss, medical bills, or some other catastrophic expense. As well, if approved, you must pay the new offer within the allotted time, or you will have to pay the original amount.
How We Can Help Remove a Tax Garnishment
The tax professionals at TaxRise have experience working with the IRS to remove garnishments. They know the steps you must take to apply for an IRS tax garnishment removal, and they will ensure that all your paperwork is handled correctly.
If you tackle it on your own, you run the risk of creating errors or missing your deadline. Any error could lead to your application being rejected and taking too long to file new paperwork could cause the duration of the garnishment to be extended.
Partnering with a tax professional does cost money, but your chances of success are exponentially higher. Not only will the experts at TaxRise help you to get the garnishment removed, but so too will they provide you with the next steps to reduce your tax liability or set up a payment plan to get you back in compliance with the IRS.
For more information call us at 833-419-RISE(7473) and our tax experts can help answer your questions.
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