When the Internal Revenue Service (IRS) garnishes your wages, you may face challenges receiving your full paycheck. However, not all of your earnings are subject to garnishment—you retain the right to keep a portion of your income to cover basic living expenses. This article explains key provisions of wage garnishment and how to navigate the process.
How Wage Garnishment Works
The IRS deducts a portion of your wages each pay period until one of these conditions is met:
- You establish an alternative payment arrangement with the IRS
- Your tax debt is fully paid
- The garnishment order is lifted
A portion of your wages may be exempt based on your standard deduction and number of dependents. The IRS provides Publication 1494 (PDF) to employers, detailing how to calculate exempt amounts.
Required Documentation
When facing garnishment, your employer must provide you with a "Statement of Dependents and Filing Status" form. You have three business days to complete and return this document. Failure to submit it on time results in your exempt amount being calculated as if you were married filing separately with no dependents (effectively zero exemption).
If you have multiple income sources, the IRS may apply your exemption across all sources, potentially allowing full garnishment from one employer.
Special Considerations
All forms of service compensation—including salaries, commissions, bonuses, and similar payments—are subject to garnishment. The IRS typically garnishes entire bonus payments because the exempt amount is already applied to regular wages during that pay period.
For those making direct child support payments (not processed through an employer), special procedures exist to exempt these amounts from garnishment. You must contact the IRS with documentation of court-ordered support payments. Note that the same child cannot be claimed both for garnishment exemption purposes and as a tax deduction.
Understanding your rights during IRS wage garnishment can help minimize financial disruption and ensure you maintain necessary funds for living expenses. Proactive communication with the IRS and careful financial planning are essential for navigating this situation effectively.