Calculating Payroll with an IRS Wage Garnishment

Tuesday, March 13, 2012
A lot of consumer’s assume that if they do not pay their taxes, it is no big deal. Unfortunately, these tax payers then find out the hard way when they realize that their hard-earned income is now subject to an IRS wage garnishment. Since the IRS has the right to utilize an IRS wage garnishment as well as other collection methods to pay off an unpaid tax bill, it is imperative that tax payers quickly move to rectify any notification of potential levy or garnishment, before they take effect. Once an IRS wage garnishment has been put into effect, the tax payers employer will receive a notification from the IRS to start withholding funds from that paycheck in order to satisfy the tax debt due. Employers will be given strict instructions on how to carry out an IRS wage garnishment within the letter they receive. If the employer does not follow these directions, he or she can be held to further penalties. Therefore, it is important that your employer follow IRS wage garnishment instructions carefully and with caution. Step One: The first step in determining an IRS wage garnishment is to determine the gross pay for the employee. Gross is the total income before any deductions have been made. Step Two: Perform standard deductions that include: • Payroll tax • Federal income tax • Social Security tax • Medicare tax • State and local agency tax • Any other state and local deductions required Step Three: Subtract any alimony or child support deductions that are already in place before the IRS wage garnishment. Child support takes importance over IRS wage garnishments always; therefore, you will still owe your child support payments prior to any IRS wage garnishments from your paycheck. If, however, the child support order was placed after the IRS wage garnishment went into effect, then child support will take a back seat to the IRS wage garnishment. Step Four: Deduct any voluntary deductions that have been opted into prior to the IRS wage garnishment. Step Five: Use IRS publication 1494 to determine what amount is correct for the IRS wage garnishment as well as what amount is considered “exempt” from the IRS wage garnishment request. You will need to look at the “Statement of Exemptions” and the “Filing Status” used on your paycheck when referencing publication 1494. Step Six: Remove any exemptions from the paycheck that are not subject to IRS wage garnishments. Any remaining balance left after all of the deductions and exemptions will be sent to the IRS in order to satisfy the IRS wage garnishment for that pay period. This process for the IRS wage garnishment is repeated each subsequent paycheck until the tax debt is satisfied. If you are unsure how to determine what income of yours is exempt from IRS wage garnishments or you want to find other options to eliminate an IRS wage garnishment altogether, the professionals at My Tax Attorney can help. With direct experience handling IRS wage garnishments, you can get out from under the garnishment burden and start getting on with your life. Do a local Google search on your state and keyword wage garnishment to find out what the laws might be in your area. Need to find out what your state’s laws are about wage garnishments? The Department of Labor has a helpful guide on wage garnishment you might want to check out. Here’s a helpful 2011 IRS table for calculating the amount that’s exempt from wage levies. Check out the Beverly Hills Bar Association online.