The government takes money out of your paycheck because you haven’t paid a bill. But sometimes, they simply take your money without any warning at all. If this happens to you, what do you do? This article explains how wage levies and liens work when placed on your paycheck and how to get them off.
What is a tax lien?
A tax lien is a formal demand by the state on your property, such as real estate or personal assets. The IRS can freeze your bank accounts if they are not paid, seize your property if not paid, and file a lien on your property if you do not pay your taxes.
The most common reason people have tax liens filed against them is that they have unpaid back taxes from years ago.
What is a wage levy?
The IRS can collect on your unpaid debt through a wage levy if you are indebted. A wage levy is a collection tool that allows the IRS to garnish your wages and deduct your funds directly from your paycheck before you receive it.
What are the consequences of a wage levy?
The IRS can take up to 15% of your income if you have a wage levy or lien. The IRS may take more than 15% of your income if:
- You make more than $150,000 per year
Or:
- You make less than $150,000 per year
What are the implications when I have a tax lien?
The negative implications of tax liens are wide-ranging. They are public records, and the information found in them can be accessed by anyone looking for you. Your credit score will significantly suffer, making it harder to get a loan or rent an apartment. If you apply for a job and your future employer does background checks on you, they may find out about your tax lien and not hire you.
Tax liens can also affect your ability to get hired at certain companies or licensed as an independent contractor by others. While some employers might overlook this problem if they see that it has been resolved (and many do), there’s no way to guarantee how any particular employer will react when they learn about your lien history.
Can the IRS garnish my wages or bank accounts without any notice?
The IRS is required to give you notice before they garnish your wages or levy your bank account. The notice must come in writing, by mail. It will list the amount owed, the dates of withholding, and how long it will last.
If you don’t pay your tax liability within 30 days after receiving a levy on your bank account, then there may be an additional 10% fee added to whatever is owed for federal tax debt collection expenses.
How does the IRS determine your income?
The IRS can use your pay stubs, bank statements, credit card statements, and credit report to determine your income. Typically, the IRS will look at all these information sources before issuing a wage levy or lien.
Fortunately for you as a taxpayer (and not so fortunate for the government), there are many ways that you can challenge an incorrect income calculation. Whether it’s because they don’t include taxes paid on your behalf in their math or they use an outdated figure from a prior year’s return when calculating how much money they owe you.
As long as you have documentation showing how much money came into your possession during the relevant period (and where it came from), then there is no reason why this shouldn’t be able to be resolved quickly and painlessly!
How much can the IRS take from my paycheck with a levy?
The IRS can only levy up to 15% of your earnings, but this doesn’t mean it’ll be that high. It all depends on your monthly wages.
If you earn $100,000 a year and owe the IRS $10,000, the agency could take a maximum of $15,000 from your paycheck (15% of $100,000). That leaves you with less than half of what’s needed for monthly living expenses—and no money left over for essential things like rent and utilities.
Can I get a loan with an IRS tax lien on my credit score?
If there is a tax lien on your credit report, lenders may be reluctant to approve you for certain loans. However, not all lenders place the same weight on the IRS or other government agencies when reviewing loan applications.
Some lenders might be willing to overlook a tax lien if they think you will be able to repay them in full and on time. A lender may also offer favorable terms based on their assessment of your ability to repay the loan at an interest rate lower than what another lender might charge.
Can I get an extension on paying my tax debt?
Yes, you can request an extension on paying your tax debt. However, the IRS may not grant your request for an extension. Typically, extensions are only given if you have a reasonable basis for requesting it and if it would be in the best interest of the United States to do so.
The length of time you can receive an extension depends on where you live and how long it takes to complete payment plans with the IRS.
What can you do to stop an IRS wage garnishment or levy?
Your options depend on the amount of debt and your income.
- File for bankruptcy. If you’re in a financial crisis and can’t pay your taxes, filing for bankruptcy may help lower or eliminate your tax debt.
- File for an offer in compromise. An offer in compromise allows you to pay off your outstanding tax debt for less than what’s owed so you can get back on track financially without worrying about paying off more significant amounts of debt over time with interest added to each payment.
- File for an installment agreement if you cannot afford to pay the total amount due but want to settle instead of declaring bankruptcy and facing the possibility of having assets seized by creditors or having liens placed against them.
Do I need a tax debt relief attorney o to help me with my back taxes?
If you have a wage levy or lien on your paycheck, it’s time to consult with a tax relief attorney. You can find one online or in your area by searching for a “tax debt relief attorney.” If you have specific questions about the status of your situation, such as whether or not you will be able to get the levy/lien released, which type of tax professional should best serve your needs and why, or what specific steps need to be taken next to ensure that all tax debts are paid off as quickly as possible—now is not the time for do-it-yourself research! When dealing with taxes and back taxes, there is no substitute for having an experienced professional on hand who can put together a plan tailored specifically toward getting things under control once again.
Don’t be afraid to seek help when you need it. Tax debt relief specialists assess your tax situation and provide options you don’t know.
Don’t be afraid to seek help when you need it. Tax debt relief specialists assess your tax situation and provide options you don’t know about. They can help with back taxes, wage garnishments, and filing tax returns in a timely manner. Don’t wait any longer to get the professional assistance of an expert in this field.
It can be terrifying and overwhelming if you face a wage levy or tax lien. But don’t panic! There are many ways to get help. Tax debt relief experts can assess your tax situation and provide options you don’t know about. They can also take care of all the paperwork, so you don’t have to worry about anything else while they work on getting rid of your debt. And if any part of this process seems confusing or intimidating, call them up! They’ll walk through every required document and appeal with you until everything is resolved – so there’s no reason not to reach out today!
