How to Stop IRS Wage Garnishment
Keep Your Paycheck and Avoid Garnishment for Unpaid Taxes
There are numerous ways to stop wage garnishment including paying off the tax debt, getting your account labeled as currently not collectible, and proving that the IRS made an error in the garnishment process. It’s easier to avoid a wage garnishment than to stop one, but if the garnishment is already in place, a tax attorney may be able to help you stop it.
A wage levy is when the IRS takes money directly from your paycheck to cover your unpaid taxes. IRS wage levies can be extremely aggressive, and whenever possible, you should get help from a tax attorney before the IRS levies your wages.
When the IRS seizes your wages to cover your tax debt, you may not be left with enough money to cover your living expenses. The IRS lets taxpayers keep some money for necessary expenses, but this amount tends to be very low. When you’re used to spending your whole paycheck, losing it to wage garnishment can create financial hardship.
Luckily, there are ways to stop an IRS wage garnishment, but unless you’re able to pay off the tax debt in full, it isn’t always easy to stop a garnishment. Generally, the best course of action is to make arrangements with the IRS before the agency garnishes your wages, but if they’ve already started the garnishment, there are still things you can do. If your wages are currently being levied, contact us at W Tax Group immediately for help.
How to Stop an IRS Wage Garnishment
In the following sections, we explain how much the IRS can garnish from your wages, how you find out about the garnishment, and what to expect when your wages are being garnished. But before getting into those details, let’s dig into your biggest question — how do you stop IRS wage garnishment?
1. Pay the Tax Debt in Full
The most obvious answer is that you can pay your tax debt in full. Once you pay the tax debt, the IRS will automatically stop the garnishment. Even if you can’t pay in full, you may want to make payments on the tax debt to shorten the amount that needs to be garnished from your wages. Unfortunately, this is easier said than done. If you could easily pay your tax debt, you wouldn’t be dealing with this situation.
2. Show That the Garnishment Is Causing Hardship
Another option to stop a wage garnishment is to prove that the garnishment is creating financial hardship. If you reach out to the IRS and let the agency know that the wage garnishment is causing hardship, they may stop it. However, hardship is subjective. To establish this fact, you need to provide the IRS with detailed financial information and a description of why the wage levy is causing distress. A tax professional can help with this process.
3. Don’t Quit Your Job – Even If You’re Tempted To
You can also stop a garnishment by quitting your job. If you’re not earning money, the IRS can’t take your wages to cover your tax debt. Clearly, this is not an effective idea, but it’s something that runs through many peoples’ minds when they’re dealing with a garnishment. However, if you stop earning money, the IRS may end up resorting to other methods to cover your tax debt such as seizing your assets or the money in your bank account.
4. Get Your Account Labeled as Currently Not Collectible
If you don’t have any money or assets, the IRS won’t pursue enforced collection actions against you. However, the agency will revisit your situation every couple of years to see if anything has changed. If it has, the agency can demand that you start paying the tax bill again. You must apply for currently not collectible status.
5. Prove That the IRS Didn’t Follow the Correct Protocol
You may also be able to stop the garnishment if you can prove that the IRS didn’t follow the right protocol when setting up the garnishment. Again, you should use a tax professional to help with this. They know the rules and protocols the IRS has to follow when collecting a tax debt.
The IRS is required to give you plenty of notice of their intent to levy, as well as multiple chances to fix your tax issue before they actually take this step. If you can demonstrate that they violated their own procedures and protocols, the garnishment may not be legal. First, the IRS has to notify you of your tax debt and send a tax bill. They must then send a final notice of intent to levy, which gives you 30 days to make a payment before they begin garnishing your wages. Finally, you must be informed of your right to a Collection Due Process Hearing. If they failed to send any of these notices or began garnishing your wages prior to the end of the 30-day window, you may have grounds to contest the garnishment.
Contact a Tax Professional to Help You
Dealing with the IRS can be tricky. It can also be stressful and costly if the agency is garnishing your wages, seizing your assets, or enforcing other collection actions. A tax lawyer can deal with the IRS on your behalf, and they can help you find the best solution for your tax issues.
How Much Money Can the IRS Take From Paychecks?
When taking paychecks to cover tax debt, the IRS leaves delinquent taxpayers a very small amount of money, called the exempt amount. As of 2024, if you’re single with no dependents, the exempt amount is $1216.67 per month, and the IRS takes all earnings over that amount. A married couple with two dependents would get to keep $3266.67 per month, and the IRS levies the rest.
Once a wage levy is in place, any money you earn above the exempt amount can be taken by the IRS and applied to your tax debt. If you receive a bonus, the IRS will take it. If you have two jobs and one job covers the exempt amount, the IRS can take the remaining amount from that job and all of your earnings from your second job.
How Do You Know If the IRS Is Going to Garnish Your Wages?
An IRS wage garnishment shouldn’t be a surprise. Before issuing the garnishment, the IRS will send you a Final Notice of Intent to Levy and Notice of Your Rights to a Hearing at least 30 days before the levy. To ensure you get the notice, the IRS will either give it to you in person, send it to your last registered address as registered mail, or leave it at your place of business.
The IRS will also send you a Third Party Contact Notice alerting you that the agency is going to talk to a third party, in this case, your employer. Then, the IRS will send a Notice of Levy on Wages to your employer, and generally, your employer will start garnishing your wages during the next pay period.
The IRS will send your employer IRS form 668-W, also known as a Notice of Levy on Wages, Salary, and Other Income, to levy your wages or salary. The employer must comply with the levy and send the money to the IRS. The employer may also be required to provide the IRS with information about the employee’s health insurance coverage. If the employer does not comply with the levy, the employer may be subject to penalties.
Can the IRS garnish wages without warning?
Generally, the IRS must provide you with at least a 30-day warning before garnishing your wages. However, the agency can garnish without notice in the case of a jeopardy levy, a disqualified employment tax levy, and a federal contractor levy.
A jeopardy levy is when the IRS fears they will not be able to collect the tax—for example, the tax payer plans to flee the country. A disqualified employment levy applies if you requested a hearing on employment taxes in the last two years. A contractor levy applies to contractors who get paid through the US government.
What to Expect With a Wage Levy
Your employer will give you a statement to fill out so they can figure out how much to garnish from your wages. You have three days to fill out the form, and if you don’t, your employer will garnish your wages as if you are married filing separately with no dependents.
This means your employer will send all of your earnings over $1267.17 to the IRS — you will have to live on about $316 per week.
Interest and penalties will continue to accrue while the levy is in place. Typically, the IRS will also seize all state and federal tax refunds, and it may also levy other assets such as real estate, personal property, and bank accounts.
If you’re self-employed, the IRS can even claim payments from your clients. The main difference here is that the IRS can only garnish payments you are currently owed–they cannot impose a continuous levy like they can on standard employment wages. However, this doesn’t mean your self-employment income is safe. The IRS can levy each individual payment you receive to get what they are owed. If you accept credit cards, the agency may even be able to send a levy notice to your credit card processor and intercept the payments.
How to Avoid a Wage Garnishment
To avoid a wage levy, you need to reach out to the IRS before the levy is in place. The IRS offers many different options to help people take care of their unpaid taxes, including payment plans and offers in compromise. Once a wage levy is in place, setting up another arrangement can be difficult. To get help, you may want to consult with a tax attorney.
How to Remove a Wage Garnishment
The IRS will remove your wage levy in the following situations:
- You pay the unpaid tax in full.
- The collection period expired before the levy was issued.
- You’ve set up an installment plan to make monthly payments on the debt, and the agreement says the levy can be removed.
- You file for bankruptcy.
- The levy is creating economic hardship for you.
To prove economic hardship, you may need to make a full financial disclosure to the IRS, and if the IRS removes your wage garnishment, you still owe the tax. Tax professionals can help you identify the right option for your situation.
Filing for Bankruptcy
Note that filing for bankruptcy can temporarily stop garnishment of your wages, but it isn’t necessarily a permanent solution. Debt collection must stop during the bankruptcy process, due to the automatic stay. This may give you some breathing room as your bankruptcy works its way through the courts. If the tax debt is ultimately discharged in bankruptcy, your garnishment may also be terminated. But not all tax debt is dischargeable in bankruptcy, so it’s important to discuss this option with an attorney before committing to it.
Will Quitting My Job Stop the Garnishment?
Quitting your job can temporarily pause the wage garnishment. But the IRS will find you at your new employer. If the IRS can’t garnish your wages, it will look for other assets to seize. This is not an effective way to stop a wage garnishment.
How to Stop a Wage Garnishment When You Don’t Owe the Tax
If you believe that you don’t owe the tax bill, you may be able to stop the garnishment in another way. When you disagree with an IRS tax debt, you may be able to apply for an offer in compromise based on doubt as to liability. You may be able to apply for innocent spouse relief if you believe that the tax bill was due solely to your spouse or former spouse. Or you may be able to appeal the tax in other ways. The process depends on your situation and how long it has been since the tax debt was assessed.
Child Support and Wage Garnishments
If you pay child support directly to your child’s other parent, you need to notify the IRS so your employer doesn’t take that amount from your paycheck. In this case, you cannot claim that child as a dependent when calculating your exempt amount.
Get Help With Wage Garnishments Today
If the IRS has threatened to garnish your wages or if you’re already being garnished, get help from a tax professional today. The tax lawyers at The W Tax Group understand how the IRS works, and we have experience dealing with a wide range of tax problems.
We can negotiate with the IRS on your behalf and help you get the best outcome possible for your situation. Don’t let the IRS take your wages — contact us for help today.
