An IRS wage garnishment can lead you with little to no income left for paying your day-to-day expenses. The amount the IRS calculates as necessary to live based on your filing status and number of dependents does not simply reduce your surplus income, taking away your coffee and dining out money; it can actually reduce your ability to pay your rent, utility bill, and other vital financial transactions. When you are thrust into this situation, it may seem as though you are swimming upriver with no end in sight. However, you do have ways to stop an IRS wage garnishment.
There are many solutions put in place by the IRS to help you settle your federal tax debt, which in turn removes the wage garnishment. There are also less ideal actions you can take that may stop the garnishment but could leave you in a bad financial state. Before you take any action, you should learn as much as you can about each choice to ensure you take a positive step that will help you with your financial future, rather than one that may put you in a worse situation.
Pay Your Tax Debt
The best way to end an IRS wage garnishment is to simply pay your tax debt, especially if you have the funds to pay the debt, including any penalties and interest, in one large payment. Once the IRS has received the money, they will remove the wage garnishment. You also will no longer have to worry about the IRS taking further collective action.
If you do not have the funds to pay the entire debt, you still have some options. If your tax debt is a lower amount, you can talk to your bank or lending institution about taking out a private loan or using a credit card to pay it off. Loans and credit cards typically have a lower interest rate than the IRS, which saves you money in the long run. However, you want to be sure that you will be able to pay off this debt, as you do not want to end up facing a wage garnishment from your bank or credit card company.
If you owe a larger amount, then you can set up an installment agreement. This allows you to pay off your debt, including any interest or penalties, over a period of time, which is typically around five years. You can choose monthly payments that fit into your monthly budget rather than cause financial hardship.
Negotiate a Settlement with the IRS
In certain scenarios, you can also negotiate a settlement with the IRS. One option is to file for an Offer in Compromise, a tax resolution solution in which the IRS allows taxpayers to pay a percentage of their tax debt and wave the rest. However, not many people qualify for this type of settlement. Working with a tax professional can help you determine whether or not you may be a good candidate for an Offer in Compromise or some other tax resolution program.
You can also apply to be declared Currently Not Collectible. This is not a settlement but more of a postponement. If you are in a temporary financial situation that makes it difficult to pay your debt, the IRS will place a hold on collection. Your debt will continue to accrue interest, but you will not have to pay, nor will you be faced with any collective action. Once your financial situation improves, you will once again be liable for your debt.
When you negotiate a settlement with the IRS, any collection action, including wage garnishment, will be stopped. As long as you comply with the terms of the settlement, you will no longer have any action taken against you, such as a lien, levy, or garnishment.
Less Beneficial Routes
You also have routes outside of tax resolution settlement for getting out of a wage garnishment, but they typically create a larger financial problem down the line. You could quit your job or change employees, as a garnishment is always associated with a particular job. However, this only slows down the IRS; it does not stop them. You will face a garnishment in your next job, and you may end up losing money, benefits, and more by quitting. You can also file for bankruptcy, but this also is typically a temporary measure, and you remain liable for your tax debt and may still face collective action. Additionally, filing for bankruptcy can hurt your credit, which can affect your ability to buy a car, house, or other items in the future.
In some circumstances, you can successfully appeal the wage garnishment, even if the 30 days has passed. However, the best way to stop an IRS garnishment is to settle your tax debt, either by paying it off or negotiating a settlement. Working with a tax professional, such as those at Fidelity Tax Relief, can help you choose the right resolution for your situation and ensure that you follow all the right steps for a successful negotiation. Contact us today by calling 877-372-2520 to start the steps towards tax debt relief.