What is Tax Garnishment?

Dave Slovak

A tax garnishment is a specific type of wage levy imposed on people who owe back taxes. Wage garnishments are most commonly levied on people who owe money to a governing body, such as a local or national government. The two most common types of causes of garnishment are defaulting on government-backed student loans and non-payment of back taxes. With a wage levy that is due to a tax garnishment, the government can seize a large percentage of the individual’s wages or other assets.

Man climbing a rope
Man climbing a rope

Individuals who have violated an agreement to pay a debt owed to a governing body are likely to be unpleasantly surprised at a reduced paycheck resulting from a tax garnishment. The government can garnish income from wages, tips, bonuses, and even retirement income. In addition, some people who have tax refunds due in the next fiscal year may find that the refund is withheld by the government until the back taxes are paid in full. This is considered another type of tax garnishment and is very difficult to contest.

One way to avoid a tax garnishment is to avoid owing additional tax each year. Many individuals claim fewer exemptions on their tax forms in order to ensure they do not owe additional taxes the following year. As a result, they often receive tax refunds instead of owing additional taxes, which would otherwise be difficult to resolve on a tight budget. Another way to avoid a tax garnishment is to work out a fixed payment plan with the government and to make payments on time. As long as the individual keeps making payments in accordance with the payment plan, he or she is unlikely to experience a tax garnishment.

The laws of garnishment may vary from region to region and certainly vary from country to country. Some areas allow employers to garnish employee wages for certain expenses, such as a paycheck advance, while other areas do not allow this type of garnishment. Tax garnishments, however, are rarely prevented by local governments. In fact, many regions cooperate with the national government to recuperate back taxes and other payments owed to the government. If an individual finds that he or she is having wages withheld due to a tax garnishment, the individual should seek the assistance of a tax attorney, accountant, or other qualified professional in order to resolve the matter and avoid additional fees, fines, or other unnecessary expenditures.

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