How to Stop IRS Wage Garnishment: Starts with A Deep Breath
The Internal Revenue Service (IRS) is not a federal organization that many of us enjoy. However, every year, we have to file our taxes with them. I am not sure about you, but I always find myself holding my breath when filing my taxes. I have a fair amount of knowledge of taxes, how to file them, and the best way to break even, and yet, there I am holding my breath. I cannot imagine that I am the only one that feels this way.
I know some of you out there are complete wrecks when it comes to filing taxes. It really can be a stressful and scary time. No one wants to pay money to the IRS. No one wants the IRS to chase them down for money, either. If you find yourself in a jam, perhaps you have had your wages garnished and now you want to stop IRS wage garnishment, what do you do?
So, don’t stress too much, and continue reading to find out how to do it.
What Is Wage Garnishment?
One of the ways the IRS gets the money you owe them is with wage garnishment. The IRS has the power to garnish your wages without taking you to court. Typically, when a creditor wants to garnish your wages, they take you to court and the court has to give a legal judgment allowing them to do so. The IRS does not need that.
They can just take your money. They are also allowed to garnish more of your wages than any creditor. They only have to leave you with $375 in your paycheck on which you can sustain your household. I know that $375 per paycheck would no sustain my household. The IRS is not kidding around; they will get their money.
A garnishment can apply to any type of income, such as hourly wages, salary, bonuses, and commissions. The IRS contacts your employer, without your prior knowledge, and they are legally required to send money directly to IRS. You receive a notification one full pay period before the garnishment begins. The good news to all of this is that it is possible to stop IRS wage garnishment.
Why Do We Pay Taxes?
When you want to have better tax management, you should have a clear understanding of what you are expected to pay as it relates to taxes. You are required by law to pay taxes. If you do not, you will be fined, or possibly arrested. Money that is paid in taxes goes to various activities and items across the state and country. There are many government agencies funded by your taxes. Every time you pay taxes, remember something much bigger than just you is at work.
If you choose not to pay your taxes, there are various ways that the government gets its money from you. One of those ways is wage garnishment. This is usually not a fun time for anyone that looks forward to receiving their paycheck. The good news is you can stop IRS wage garnishment, but you have to work with the IRS to do so.
How Can I Remove a Wage Garnishment?
Once it has started, you can stop IRS wage garnishment, but you have to take some steps to do it. The IRS is not going to contact you to see if they can help you stop your garnishment. As far as they are concerned, they are getting their money. If you do not contact them, they will continue to garnish your wages until the debt is paid. It is not intended to be a comfortable situation for you.
There are several steps you can take to stop IRS wage garnishment. I will highlight them throughout this article. If you would like to request a release of the garnishment because you are not able to pay your rent or mortgage, IRS may not be willing to release the garnishment. If you find yourself in that situation, you might want to consider hiring a specialist that can assist you with tax resolution. However, there is a charge for that.
Pay off Entire Debt
This may be the most obvious statement that I make in this entire article, but the best way to stop IRS wage garnishment is to pay your debt in full. If you have the money, bite the bullet and pay off your debt. It may feel like a slight hardship for a short period of time to pay off the debt in full, but it is better to do that than to lose money from every check.
You Will Get a Notice about the Garnishment
The IRS does not just randomly begin garnishing your wages. They send you written communication requiring you to pay your debt. They send you a notification telling you how much you owe and giving you the opportunity to pay the debt. When you ignore them over an extended period of time, they garnish your wages.
The letters that IRS sends to you clearly state that they will garnish your wages. Perhaps you have moved, or there is a problem with your mail and you have not gotten the notices. You are able to pay your debt to IRS over the phone, by mail with check or money order. You can also pay online with a debit or credit card. They can also take the money directly from your bank account.
Consider Getting a Loan
You may decide to take out a loan to pay the IRS debt because that monthly payment is a smaller amount than what IRS is garnishing. You will also have fulfilled your requirement to IRS and get them off your back. You might want to consider borrowing money from family or friends so that you can pay a lump sum amount to IRS.
Set Up a Payment Plan
Another way to stop IRS wage garnishment is to set up a payment plan. You have to make a formal request to the IRS to set up a payment plan.
Form 9465
You must submit form 9465, which is an IRS form requesting a payment plan. A payment, or installment, this plan is an agreement between you and IRS that you will make regular monthly payments in the agreed-upon amount until the debt is paid. The payment amount is based on income, so there is an expectation that the higher your income is, the more money you can pay per month.
However, the IRS does try to make these payments affordable. This is not like wage garnishment where they take the full amount they can. When you set up a payment plan, they try to be agreeable and compromise on the amount you have to pay. You are also able to choose which day of the month you want to make your payment. The great thing about an installment plan is it allows you to set up a monthly payment that you can actually afford to pay.
Declare a Hardship
Another more challenging way to stop IRS wage garnishment is to declare a hardship. You have to prove to that by continuing to have your wages garnished or setting up a payment plan would mean an extreme financial problem for you and your family. If you can prove that, IRS may give you a reprieve from paying the debt. In an effort to demonstrate the hardship, you have to provide bank statements and pay stubs.
You Get More Time
Keep in mind that IRS will not completely take away the debt, they are only going to allow you more time to get your finances together and pay the debt, either by making payments or paying it in full. Before you approach IRS to tell them you have a financial hardship, gather all of your documentation to prove it. You should also do some research to determine what IRS considers a hardship. Your definition may be different from that of IRS.
Settle for a Lesser Debt
You can stop IRS wage garnishment by making an offer in compromise (OIC). This is also known as settling for a lesser debt. Basically, this is paying off what you owe to IRS at a lesser amount. You could pay pennies instead of dollars. This is not easy to do as IRS does not usually grant this.
Hire Professional Help
If you would like to go this route, you should hire a professional to help you. Someone who specializes in tax resolution knows exactly what forms and proof that you need to provide to IRS to help get your debt settled. If you decide to use these tax tools, you should be aware that hiring a specialist is going to cost you.
IRS does have qualifications to determine if you might be eligible to settle your debt for less. You should visit their website and review these qualifications before you attempt to settle your debt. If IRS approves your OIC, it reduces the amount you owe back to them. You have to file all of your tax returns before IRS grants you an OIC. If your OIC is denied, you are able to appeal the decision, but you must do so within 30 days.
What Is An Extension?
A tax extension is when you ask the IRS to grant you additional time to file your tax return. An extension does not reduce how much you pay the IRS. You still receive a penalty for paying your taxes because even with an extension, any money that is due to the IRS is still considered late. You are able to file an extension electronically, so you do not have to worry about paper forms.
Why Get an Extension?
There could be various reasons why you need to request an extension on filing your taxes. Filing the request is a simple form, but you must be sure to fill it in completely and correctly. If you file an extension, that may impact your ability to pay your taxes. As I stated above, an extension does not change how much you owe or when it is due.
If you owe a large amount of money and you do not pay it, you may still be subject to having your wages garnished. Filing an extension is not a way to stop IRS wage garnishment. Please remember, filing an extension only extends that date by which you must file your tax return. It does not change anything else about how much you owe or when it is due.
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Is Bankruptcy Really an Answer?
It may not be a good answer, but it is certainly an answer to how can you stop IRS wage garnishment.
It is the Last Option to Consider
Filing bankruptcy should be the absolute last option you choose. There are many other ramifications to filing bankruptcy that you should consider before doing so. It will prevent IRS from collecting money from you. Keep in mind, when you file bankruptcy, it causes a freeze on any collections that are happening, including garnishment by the IRS. It may only be temporary.
Depending on the outcome of the bankruptcy determination, it may clear all debt including back taxes. However, you may still be on the hook for paying IRS. However, it has given you some time to find additional money to pay them, even if you have to set up a payment plan.
Takes a Long Time to Recover from It
Keep in mind, bankruptcy is a huge deal. It has major implications on your credit report and credit score. Those implications follow you around for a long time. It is a drastic hit to your credit which takes you a long time from which to recover. You should only consider filing bankruptcy when you truly have no other options.
Conclusion
When dealing with the IRS and wage garnishment, taking a deep breath is a good idea. You need to remain calm and understand all of your options. This way you are able to pick the best solution for you. Wage garnishment does not have to be a death sentence. You do not have to be stuck with it forever. However, you do need to figure out another way to repay the IRS.
The intention of wage garnishment is to send you a message that the IRS is serious about getting their money. They want you to take it seriously and you should. Remember, IRS is not out to make your life miserable. You should contact them to set up some other payment method if they begin to garnish your wages.