Getting the mail is ordinarily a routine thing done almost every day. But what if one of the letters you receive tells you that you’ll be getting less and less of your money from your paycheck?
That’s a letter you’d rather not receive, and it’s a part of getting an IRS wage garnishment.
Getting a wage garnishment is not an easy thing. Removing them is complicated, but the IRS gives notice before one is instituted.
It’s a fairly common way for the IRS to collect back taxes. But, unlike regular creditors, the IRS doesn’t have to sue you and get a judgment before a wage garnishment kicks in. All that’s needed are a couple notices and an opportunity for a taxpayer to make payments.
The IRS first starts the wage garnishment process by sending you a written notice indicating how much back taxes are due. This notice is called a Notice and Demand for Payment, and should itemize the tax, the interest, and any accompanying penalties. A deadline to pay the full balance will also be stated.
Then, the IRS decides whether it will pursue a wage garnishment. There’s other tax collecting measures the IRS can use with or instead of a wage garnishment, including a bank levy or tax liens. Wage garnishments, however, are typically the IRS’s last resort for collecting back tax debt.
If the IRS gives a wage garnishment the green light, the second notice, called the Final notice of Intent to Levy and Notice of Your Right to a Hearing, will be sent.
After you receive this second notice, you’ll have a month to know that a wage garnishment is in your future. If sent by mail, it’ll be sent via certified or registered mail. It can also be served via personal service, the same way people are served with lawsuits.
Once you’re subjected to a wage garnishment, expect a sizable chunk of your paycheck to disappear.
An IRS wage garnishment differs from ones obtained by creditors. First, IRS wage garnishments can take out more of your money. The tax code doesn’t regulate how much of your income the IRS can seize via a wage garnishment. Rather, it regulates how much the IRS must leave behind for you to pay your bills.
The leftover amount reflect what the law thinks you need to pay your living expenses, without any room for living large. Basic living expenses is what you’ll be able to pay.
That amount, however, is determined by your number of claimed exemptions. The IRS uses a table to figure this out.
For instance, if you’re single and paid biweekly with five exemptions, you’ll receive just $1,011.54. If you’re married with five exemptions and paid biweekly, you’ll receive $1,253.85. If your lifestyle is more expensive than these figures, your best bet is to work with a tax professional to remove the wage garnishment.
Removing a wage garnishment is possible. If you’re subjected to a financial hardship due to a wage garnishment, let the IRS know â€“ it’ll help your case for removal.
To get it removed, you’ll have to set up a back tax payment plan with the IRS.
Part of the removal process is the filing of all back tax returns. Then, a Form 433 has to be filed. This form gives the IRS some of your financial details that help it determine a workable back tax payment plan. A host of documents and records will have to be filed with Form 433, so keep your records handy.
Once the IRS determines you’re eligible for a payment plan, you can ask for the wage garnishment to be officially released. While you’ll get your whole paycheck again, you’ll still have to give up some of it to the IRS through your payments, and those monthly payments can wind up being unaffordable.
Wage garnishments are inconvenient and difficult. And they’re also unnecessary. By working with a tax professional to get your finances in order, you can help guarantee that a wage garnishment won’t be in your future.
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