Hundreds of thousands of U.S. citizens carry tax debt due to underpaying or wrongly reporting their taxes. If you owe money to a commercial creditor, your social security checks – unlike your regular wages – are usually safe.
The IRS, in contrast, can levy the benefit payments you receive from the Social Security Administration if you have tax debt. Certain other types of debt like child support, alimony, or federal student loans may also lead to social security levies.
How much can the IRS garnish from your social security? For answers, we’ve turned to members of the trusted Levy & Associates team, who have provided full-service tax resolution, audit defense, and accounting services nationwide for more than 20 years.
Under the Federal Payment Levy Program (FPLP) that began in 2020, the IRS can garnish social security wages if the recipient has unpaid tax debts. Income that is liable to levying includes senior and survivorship benefits.
Prior to 2020, SSI benefits less than $750 per month were exempt from levies. With the FPLP in effect, however, the IRS can levy any social security benefits for tax debtors. The IRS does not need a court order to garnish your benefits.
However, the IRS cannot levy your social security income in some cases. You may expect to retain your full benefits if:
· You receive SSI due to disability insurance
· Your income falls below a certain poverty level
· The recipients are your minor children
· You receive a lump-sum death benefit
So, how much can the IRS garnish from your social security benefits? In general, you may expect to lose:
· Up to 15% of your social security benefits under the FPLP if you have unpaid taxes
· Up to 50% of your benefits in the case of unmet alimony or child support obligations
· Up to 65% of your benefits if you fail to pay alimony or child support for 12 weeks or more
The government will implement a manual levy in some cases rather than withhold a set portion of benefits. In these cases, the recipient may retain a minimum amount for living expenses, and the government will withhold any sum exceeding that amount. This minimum threshold updates from year to year according to IRS guidelines.
Before the IRS starts levying your social security, you will always receive multiple official notices.
Usually, if you owe money on your tax return, the IRS will send you the first notice within 60 days. This letter will notify you of your current balance and require you to pay the debt. If you don’t pay or respond, several other notifications will follow.
Eventually, you will receive a formal notice letting you know that the IRS intends to levy your SSI benefits. After receiving this letter, you will have 30 days to pay your outstanding taxes or resolve the issue in other ways.
The IRS can only seize your property or levy your SSI benefits if:
1. The IRS has assessed your tax debts and sent you an official message requiring payment
2. You did not pay or resolve your tax debts
3. At least 30 days have passed since you received the final notice on levy before social security benefits
If the IRS starts to levy your social security benefits before meeting these three conditions, you may have grounds for an appeal.
Apart from garnishing your social security payments, the IRS can act against you in other ways. While you won’t land in jail unless you commit crimes such as tax evasion or tax fraud, the IRS may:
· Seize physical property, such as your house or vehicle
· Freeze any bank accounts in your name
· Levy your wages
If you can’t afford to pay your tax debt in full, you may have several options to settle your debt and prevent or stop the IRS from levying your social security.
An IRS Installment Agreement
If your tax debt is under $50,000, you can spread your tax payments into monthly installments for several years. Once you commit to a payment plan, the IRS may consent to eliminating or reducing interest on your tax liability.
A Partial Payment Installment Agreement (PPIA)
The PPIA option allows you to make monthly payments against part of your tax debt while another part of the liability expires. You must make full financial disclosure to the IRS to qualify for a PPIA.
An Offer In Compromise
Under an Offer In Compromise, you would settle on an offer and pay it off in a lump sum or installments within 24 months. Like a PPIA, this option requires full financial disclosure.
Currently Not Collectible (CNC)
If you’re in extremely difficult financial circumstances, you may apply for Currently Not Collectible (CNC) status. To do that, you will need to file a Collection Information Statement that proves you have no income or assets to cover your tax debt.
If you’re facing a significant amount of tax debt with possible interest, you may need professional legal help to resolve this complicated situation. At Levy & Associates, we have helped many clients get out of difficult circumstances involving unpaid back taxes, penalties, and wage garnishment.
Do you worry about your unpaid text debt? Are you asking yourself, “How much can the IRS garnish from my social security?”
Our team at Levy & Associates has plenty of experience helping taxpayers just like you. We can evaluate your case, work with you to reach an acceptable debt settlement, and suggest strategies to avoid future tax debt.
Please schedule an appointment with a Levy & Associates team member today by calling us at 800-TAX-LEVY.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.