If you are in debt and owe taxes, the IRS is able to take things from you that you earn, whether that is your regular income, your property, or your social security benefits. In addition to taxes, the government can also garnish your social security checks if you owe federal student loans, have defaulted home loans, owe alimony or child support or have other debt that is owed to a variety of federal agencies.
Generally speaking, the IRS has an automatic levy of your social security at 15 percent. That 15 percent will be used to pay off your tax debt until it is paid in full.
What wages are eligible?
If a levy is placed on your social security benefits, the IRS is able to take 15 percent of your social security payments to satisfy your debt. If you receive benefits under the Federal Old-Age and Survivors Trust Fund or Disability Insurance Benefits, any payments you receive can be levied until your tax debt is paid off. Payments such as benefits paid to children or lump sum death benefits are not eligible and will not be taken from the IRS if you have a levy placed on you.
What if I can’t pay the debt?
If you are deemed unable to pay, meaning the IRS put you in a category called “Currently Uncollectable” status, that levy on your social security benefits can be stopped. The IRS will always give advance warning with intention to levy, whether it’s your social security, your bank account or your wages.
Once you receive that intention to levy, you have 30 days to respond and take an action before it comes to fruition. You can either pay the tax you owe, if possible, or file for an appeal. If you cannot pay the tax debt, you can apply for a payment plan, such as an Offer-in-Compromise, declare hardship status, or you can do nothing. If you choose to do nothing, the IRS will begin to garnish your wages 30 days after the final notice was sent, and they will continue to do so until your tax debt is paid off.
If you are worried about your social security being levied, contact the professionals at Levy Tax & Associates to learn what your options are for stopping or removing this levy, should you qualify. Contact us at 1-800-TAX-LEVY or visit our website to learn more.