Posted by LWM Team on Thu, Feb 25, 2010
Many people will find themselves in a position at some time in their lives when they owe the IRS back taxes. It's easy to ignore this and hope it will simply go away but it won't. If you haven't made any kind of agreements with the IRS, chances are you'll end up with a wage garnishment. A wage garnishment is when they take a percentage (25% usually) before you get your paycheck. The first time this happens, you'll be very unhappy, especially if all of your utility bills are due. A wage garnishment release can help you remain in a stable financial position.
To get a wage garnishment release, you'll have to provide a good reason for it to the IRS. A good example is if you made $3000 per month before the garnishment, afterwards you only made $2250, and you have monthly bills totaling $2500. Obviously, the IRS will realize this isn't going to work and may lead to you having to sell your property. They don't want that to happen and will usually authorize the wage garnishment release if you comply with a payment plan.
Before you start this process you will want to get all needed documents in order and these are: Paycheck stubs, bank statements, bills, property appraisals, and proof of other types of income such as child support, worker's compensation, and other income types. The more you provide, the better your chances.
Using a service or tax attorney is the best way to get a wage garnishment release. They will not charge you an arm and a leg because they are trying to get you tax relief and understand the burden you already have financially. The Internet is a great resource to find a service that will do this for competitive prices.
Posted by LWM Team on Wed, Feb 24, 2010
One of the most common ways the IRS uses to get back taxes from you, is wage garnishment. First you'll receive a letter in the mail that shows you how much will be garnished per paycheck. The average amount is a whopping 25%. With the price of renting a home, utilities, paying for a car, and other needed expenses, you may need a wage garnishment release to be able to continue your life as usual without having to make major changes or get yourself into debt in some other area such as your credit.
A wage garnishment release can happen in quite a few ways. Naturally, when you pay it off, it will stop but you can also have a wage garnishment release by:
- Proving the garnishment is giving you financial difficulties.
- Showing the IRS you can pay it off better without the garnishment.
- Already having an installment agreement with the IRS.
These are the most common ways to get a wage garnishment release but it can be quite difficult to get some of them going on your own. Talking to the IRS can be difficult and intimidating for a lot of people so your best bet is to find a tax attorney who can handle things for you.
The worst thing you can do is get further in debt by using small loan services every few months to help keep your finances where they should be while this garnishment is in effect. This is just a temporary “band-aid” for your finances and after a few months, the interest from these small loans may end up worse than the garnishment itself. If you feel like you have the knowledge to do it yourself, you can visit your local IRS office and get all the proper forms but if you get denied, you will need additional help.
Posted by LWM Team on Mon, Feb 22, 2010
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A lot of people, especially those who are self employed, put off filing their tax returns until the very last minute and it can be very easy to overlook them entirely. People put off filing them for all kinds of reasons such as procrastination, not enough money at that time, or simply because they just don't feel like it. No matter what your reason, it's not a good idea to let unfiled tax returns pass the one year mark. After one year, the IRS gets upset and you will be put into a category called “Non-Filer”. This is not a good place to be.
How the IRS finds out
The IRS has a top notch computerized system called the IRP or Information Returns Program. This compares your W-2's, 1099s, and other forms to what employers have filed and if they don't match, you will get a letter. If you ignore the letter, a call will come, followed by an agent.
Penalties
The IRS doesn't take Non-Filers lightly. You can get up to one year in prison and/or a fine of up to $25,000. That's for each year you haven't filed. If you have any unfiled tax returns from previous years, get them taken care of immediately to show you are cooperating and you should be ok.
IRS procedure
If you have unfiled tax returns from six or more years ago, odds are the IRS won't come after you. Especially if six years ago you worked in a retail store or some other lower paying job. Just because the IRS isn't calling and sending agents doesn't mean you don't have to pay. Any taxes owed have been gaining penalty fees and interest that entire time.
What you should do
Take care of any unfiled tax returns immediately even if you can't afford them right now. This will stop all the penalty fees but not the interest. If you have many years worth, send them individually on different days. This can help keep you under the IRS radar.