Wage Garnishment FAQ
The Internal Revenue Service (IRS) uses wage garnishment as part of its tax collection process. If you have an unpaid income tax bill and the IRS is garnishing your wages, the IRS sends a notice to your employer. Your employer then must send part of each paycheck to the agency until you've paid your tax liability. The following frequently asked questions address issues related to the wage garnishment process, including when the IRS can garnish wages and the agency's rules.
- What is an IRS wage garnishment?
- When does the IRS garnish wages?
- How much of my pay can the IRS garnish?
- Can I be garnished for my spouse's tax bill?
- Can the IRS garnish my Social Security benefits?
- What payments are entirely exempt?
- Can the IRS garnish my tax refund?
- Can states garnish wages?
- More questions? Talk to an Attorney
Wage garnishment is the legal process through which an employer must withhold part of a person's earnings to pay a creditor. Often, this results from a court issuing a wage garnishment order. But, there are some situations where wage garnishment can begin without court action, such as unpaid taxes, student loans, or alimony.
When an employer gets a notice of wage garnishment, it must make the required deductions as part of their payroll process. Title III of the Consumer Credit Protection Act (CCPA), administered by the Wage and Hour Division of the U.S. Department of Labor's Employment Standard Administration, bars employers from firing employees subject to wage garnishment.
While most people will refer to situations where the IRS collects a part of your paycheck as "garnishment," it is a tax levy on your wages. A tax levy is a legal process through which the IRS can seize property to collect a tax debt. Federal law allows the IRS to use tax levies in its collection process.
The IRS issues a levy when you don't pay your taxes and decides that a levy is an appropriate collection method. The IRS can issue a levy for any property you own, even if it's held by someone else. This allows the agency to levy your wages, bank accounts, and retirement accounts.
In most cases, the following four things must happen before the IRS imposes a levy on your wages:
- The IRS must send you a tax bill, known as a notice and demand for payment
- You don't pay the tax bill
- The IRS sends you a Notice of Intent to Levy and Your Right to a Hearing at least 30 days before the levy begins
- The IRS must send you advance notice that the IRS may be contacting other parties about collecting your tax bill
No matter how much you owe the IRS, the agency must leave you with enough monthly money to pay your basic living expenses. The IRS bases the amount of pay subject to garnishment on your "disposable earnings," which is the amount left after making legally required deductions. Examples of such deductions include federal, state, and local taxes, your share of state unemployment insurance premiums, and Social Security taxes. It also includes withholdings for employee retirement systems required by federal or state law.
The amount the IRS can garnish depends on several factors, but it will often take between 25% and 50% of your disposable earnings. But, the tax code makes some income exempt from garnishment.
The size of your exemption depends on several factors, including how much you earn, how often you get paid, and how many dependents you have. The following list gives 2023 exempt monthly wages based on a taxpayer's filing status and dependents:
- Single, no dependents: $1,154.17
- Single, one dependent: $1,545.84
- Head of household, two dependents: $2,516.67
- Married filing jointly, no dependents: $2,308.33
- Married filing jointly, two dependents: $3,091.67
If you filed a joint return with your spouse showing you both owed taxes, you will be responsible for making any required payments. That means the IRS can garnish your wages if your spouse fails to pay their taxes.
The IRS can garnish up to 15% of your monthly Social Security retirement benefits.
The IRS can't garnish certain payments you receive. These payments include:
- Unemployment benefits
- Social Security disability insurance benefits
- Workers' compensation
- Certain public assistance
- Court-ordered child support payments
While your tax return may show that you are due a refund for a tax year, if you owe back taxes to the IRS, it can keep some or all of your refund.
Like the federal government, most states have empowered state agencies (usually the department of revenue) to garnish your wages for unpaid state taxes.
If you are facing an IRS wage garnishment levy, you need the help of a local tax attorney. These skilled tax professionals will protect your rights and minimize your exposure to garnishment and other IRS collections actions.
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