If your wages are garnished, the Internal Revenue Service will allow your employer to pay you only a small part of your salary and the rest is going to be forcibly taken by the government. The exact amount that IRS leaves for you will depend upon where you live and how many exemptions you claim in your tax return, but once the IRS garnishes your income, it makes what is likely a difficult financial situation into an outright panic. The following paragraphs will explore whether or not an installment agreement is the ideal solution to an IRS garnishment and the downside to stepping into an installment agreement.
If you contact the IRS and inquire them a way to remove the wage garnishment, the first question they will ask is “Can you clear the tax dues entirely?" Hardly any taxpayers can afford this method. If you cannot, IRS will give a monthly repayment option i.e. the installment agreement. If you opt for this, you are required to fill up either one of this form 433-A or 433-F.
Forms 433-A, 433-B, and 433-F provides the IRS the list of your income which will be used to compute your monthly payment. Your living expenses, any bank loans, assets you own as well as other liabilities is going to be entered in this form. With all of these details, IRS will figure out how much could pay monthly to set up an installment agreement.
You should not expect that your every expenditure is going to be accepted by the IRS. Consider for instance your living cost and month-to-month expenses comes around $2000. But in line with the national table of expenses, the IRS may provide maximum allowance of only $1200. In that case, they will say that you've the power to pay $800 on a monthly basis. But the reality is you won't be having hardly any money to pay it.
If you tell the IRS that you'll be asked to vacate the house when the total rent is not given to the owner of the house, IRS will simply say, “proceed to a cheaper residence ". To be honest, the cost of moving also calls for lot of money and on several occasions an adequate replacement house will not be available.
This is the time for you to persuade the IRS to accept higher than “allowable” expenditures for your living needs. However for a common taxpayer, it's going to be lot more hard to make this happen if they negotiate by themselves. It has to be proven that you'll require the specific residence for your family and only a tax attorney can handle this situation by successfully dealing with the federal agency.
For example, if you use part of the apartment or house for your business, you can claim for more than the allowable expenses. If you have a special needs for a mobility house and if you cannot find a dwelling anywhere with similar features at a smaller price, your allowable expenditure will probably be increased.
However, you can't claim for bigger expenses when IRS believes that it is not required. Suppose your home is worth million dollars and also you are paying $10,000 monthly towards mortgage. Do not expect that the Internal Revenue Service will sanction the extra $7200 towards expenses. Instead the IRS will ask you to move to a less expensive home so that the monthly installment for mortgage loan can be taken off completely from your expenses.
Keep in mind, there is a limit on the allowable expenditures. But under certain circumstances, one can ask for higher allowance to maintain the minimum standard of living. Few of the unavoidable expenses are education cost for your kids, secured loans, healthcare, transportation and the repayment of other taxes like state property taxes.
You're responsible in identifying the necessary expenses and demonstrating it properly to the IRS or else they will figure out by themselves and implement a payment plan for an amount that by no means you can afford to pay every month. And generally what happens is that taxpayers default one of two ways: they cannot make their installment agreement payments, or they stop paying their current year taxes and when those come due, the IRS will end the payment agreement and start garnishing wages once again .
IRS agents work best that brings benefits to the government, not to you and so they really do not care about your financial problems. The best remedy for any IRS problems is to be educated about the techniques of efficiently dealing the IRS. Check out our website today to quickly gain access to 7 step expert guide on how to get a lasting solution for the IRS tax issues.