A wage garnishment, unlike other levies will have a serious impact on your financial wellbeing.
The Internal Revenue Service takes all of your salary except for a specific amount that can be exempted from levy as per the law.
The actual amount that they leave for you is based on several things such as the exemptions that you claimed on your W-4, the place you live and your paycheck frequency.
Therefore no matter how much money you make, the IRS is going to leave you just a couple of hundred dollars per week.
The IRS generally offers installment agreement plan to pay off your debts.
In this article, we will explain whether the installment agreement is the best solution or not to an IRS wage garnishment.
If you have a wage garnishment and call the Internal Revenue Service to get it removed, the very first thing they will ask you is if you can pay the tax debt in full.
For few people this is an option.
If not, the IRS will give a monthly payment option i.
e.
the installment agreement.
If you choose this, you will be asked to fill up a form 433-A or 433-F.
A Form 433-F/433-A is a collection information statement which the IRS uses to analyze what's the most you can afford each month towards your balance.
You need to fill details about your average income and living expenses, any bank loans etc.
Using this, the IRS will compare your net income with your month-to-month expenditures and determine a monthly payment plan that could work in your situation.
Only certain expenditures are allowed by the IRS to claim.
For instance, consider your monthly bills average around $2000.
But the IRS will calculate based on their stipulated guidelines like the place you live, average rental cost in your state and so on.
According to their calculation, they may say that you expenditures can only be $1200 and you have the capacity to pay $800 each month.
And they won't care about whether you have the money or not to pay the estimated amount.
If you tell the IRS that the landlord will ask to vacate your place if you don't pay the full rent, without a second thought, the IRS will ask you to find a cheaper place to live.
But the truth is moving to new place costs a lot and sometimes it will be hard to find a good replacement house.
This is where you can make the IRS to accept the housing and other expenses at an amount higher than the allowable rate.
But doing this all on your own generally won't produce a positive end result.
It needs to be proven that you need the particular house for your family and only a tax attorney can handle this situation successfully with their expertise in negotiating with the IRS.
If you live and also run your business in the same house, then it could make the extra expense allowable.
If there is a special need for mobility house and if you can't find housing with the same features like the one you reside now at a cheaper price, additional expenses are permitted legally to claim.
However, there is a limit.
Suppose you reside in a million dollar house and your loan payment is $10,000.
In that case, the Internal Revenue Service will not offer you that extra $7200.
They want you to move to a cheaper house so the monthly payment for mortgage can be taken off entirely from your expenses.
But the IRS will give time (up to one year) to find a new house while not damaging your credit score by going into foreclosure.
As per the law, there are certain limitations on the expenses but it is possible to get approval for extra allowance to maintain minimum standard of living.
Some of the unavoidable expenses are education for your kids, payment for state property taxes and transportation, secured loans and senior medical care cost.
When you fail to show properly about what your basic expenses are or exactly how much you need every month, don't get surprised to see an unaffordable repayment plan from the IRS.
Generally, in this situation the taxpayer will start to default the installments or no longer can pay any new taxes.
So when you ignore the current year taxes, the IRS will cease your installment agreement and come back to you with a new wage garnishment.
This will turn into a never ending trouble for you.
The Internal Revenue Service takes all of your salary except for a specific amount that can be exempted from levy as per the law.
The actual amount that they leave for you is based on several things such as the exemptions that you claimed on your W-4, the place you live and your paycheck frequency.
Therefore no matter how much money you make, the IRS is going to leave you just a couple of hundred dollars per week.
The IRS generally offers installment agreement plan to pay off your debts.
In this article, we will explain whether the installment agreement is the best solution or not to an IRS wage garnishment.
If you have a wage garnishment and call the Internal Revenue Service to get it removed, the very first thing they will ask you is if you can pay the tax debt in full.
For few people this is an option.
If not, the IRS will give a monthly payment option i.
e.
the installment agreement.
If you choose this, you will be asked to fill up a form 433-A or 433-F.
A Form 433-F/433-A is a collection information statement which the IRS uses to analyze what's the most you can afford each month towards your balance.
You need to fill details about your average income and living expenses, any bank loans etc.
Using this, the IRS will compare your net income with your month-to-month expenditures and determine a monthly payment plan that could work in your situation.
Only certain expenditures are allowed by the IRS to claim.
For instance, consider your monthly bills average around $2000.
But the IRS will calculate based on their stipulated guidelines like the place you live, average rental cost in your state and so on.
According to their calculation, they may say that you expenditures can only be $1200 and you have the capacity to pay $800 each month.
And they won't care about whether you have the money or not to pay the estimated amount.
If you tell the IRS that the landlord will ask to vacate your place if you don't pay the full rent, without a second thought, the IRS will ask you to find a cheaper place to live.
But the truth is moving to new place costs a lot and sometimes it will be hard to find a good replacement house.
This is where you can make the IRS to accept the housing and other expenses at an amount higher than the allowable rate.
But doing this all on your own generally won't produce a positive end result.
It needs to be proven that you need the particular house for your family and only a tax attorney can handle this situation successfully with their expertise in negotiating with the IRS.
If you live and also run your business in the same house, then it could make the extra expense allowable.
If there is a special need for mobility house and if you can't find housing with the same features like the one you reside now at a cheaper price, additional expenses are permitted legally to claim.
However, there is a limit.
Suppose you reside in a million dollar house and your loan payment is $10,000.
In that case, the Internal Revenue Service will not offer you that extra $7200.
They want you to move to a cheaper house so the monthly payment for mortgage can be taken off entirely from your expenses.
But the IRS will give time (up to one year) to find a new house while not damaging your credit score by going into foreclosure.
As per the law, there are certain limitations on the expenses but it is possible to get approval for extra allowance to maintain minimum standard of living.
Some of the unavoidable expenses are education for your kids, payment for state property taxes and transportation, secured loans and senior medical care cost.
When you fail to show properly about what your basic expenses are or exactly how much you need every month, don't get surprised to see an unaffordable repayment plan from the IRS.
Generally, in this situation the taxpayer will start to default the installments or no longer can pay any new taxes.
So when you ignore the current year taxes, the IRS will cease your installment agreement and come back to you with a new wage garnishment.
This will turn into a never ending trouble for you.
Source...