In 2020, U.S. citizens owed an estimated $114 billion in back taxes to the IRS. That’s a lot of money left on the table, and the government does intend to collect on it.
One way the government collects on debts is by garnishing a person’s wages. This means that your employer will be required to send a portion of your paycheck to the IRS before you receive it.
While this may seem fair and simple when filing as a single taxpayer, what happens when you are married and filing jointly? You might now be asking “can the IRS garnish my spouse’s wages”? What if you’re now divorced? Is your ex-spouse responsible for your tax debt?
Keep reading to learn about your options when facing IRS garnishment and what that means for your family.
What Is IRS Wage Garnishment?
IRS wage garnishment does not begin immediately after any debt is incurred. Once the IRS determines that you owe back taxes, they begin sending notices in the mail. When these notices go unanswered and no arrangement has been made, the IRS will move to collect the back taxes.
The process of wage garnishment is as follows: the IRS will notify your employer of your tax debt, and your employer will be required to send a portion of your paycheck to the IRS before paying you. The amount the employer sends is determined by the IRS, and your employer will notify you of the wage garnishment before you see a lighter paycheck.
The IRS may also go after your pension and other retirement income. The important thing to remember is if it’s taxable, then it’s a safe bet that the IRS can garnish for payment of tax debt.
But what about your spouse’s wages?
Can the IRS Garnish My Spouse’s Wages?
There are a few scenarios to consider when determining if the IRS can garnish your spouse’s wages. You will need to determine if the debt was incurred before your marriage, during the marriage, or after the marriage ended. Your filing status at the time you incurred the debt is also important.
Debt Before Marriage
If you incurred the debt before you were married, then your spouse is safe from having their refund or wages garnished. The IRS does not typically penalize those not involved in debt incursion. However, anyone can make a mistake, including the IRS. If your spouse has their wages or refunds garnished due to your tax liabilities, they may qualify for injured spouse allocation.
Filing jointly after the debt has been incurred does not entitle the IRS to use your spouse’s portion of any refund to pay your tax debt. The Injured Spouse Allocation process helps spouses keep their portion of tax refunds in this case.
Debt During Marriage
If you and your spouse were married and filed jointly the year the debt was incurred, your spouse may be responsible for any back taxes you owe. There are a few options, however.
If you or your spouse can prove that they had no knowledge of the debt at the time, they may apply for Innocent Spouse Relief. You must also provide evidence that your spouse did not benefit from any refund received due to improper filing, even if they were not aware of the benefit, or if the benefit occurred many years after the false filing.
If you or your spouse can prove all of these things, your spouse may have their portion of the tax debt forgiven.
Debt After Separation
Sometimes spouses will file their taxes jointly even though they are no longer living together. Regardless of if it’s only a trial separation or if you’re heading for divorce, filing jointly the year tax debt is incurred could leave your spouse or former spouse responsible as well.
If this occurs, your spouse may qualify for Separation of Liability Relief. To qualify, you will need to show that you are divorced, legally separated, or haven’t been living together for at least 12 months.
Protecting Your Wages
There are a variety of ways to avoid owing the federal government money. It would behoove you to follow a few simple tips to avoid future tax liabilities so that you don’t need to wonder whether the IRS can garnish your spouse’s wages year after year.
The first and easiest step is to check if you are taking the appropriate amount in taxes out of your paychecks. By adjusting your W4, you can have less taken out in each paycheck, but you will have to pay that back at the end of the year.
The second most common reason for incurring back taxes is not claiming extra income. Extra income is any source of income outside of your place of employment. The sale of stocks and land and even unemployment benefits are all subject to tax by the federal government. Even birthday money from relatives is taxable income. Where the trouble really lies is when the amount is substantial. Selling stock or land for tens or even hundreds of thousands of dollars can lead to a very high tax bill if not claimed correctly.
Don’t let Back Taxes Tax You
So, can the IRS garnish your spouse’s wages? Clearly, the answer is more complicated than a simple yes or no. The answer depends on your current and previous marital status and tax situation.
Determining who is responsible for paying tax liabilities is nothing compared to actually paying the tax debt. Now that you know your spouse is off the hook, you still need to pay your tax debts.
Fiscal Solutions Group‘s team of experts can assist with tax debt and debt forgiveness, and we can offer compromises and other financial solutions to the IRS. Sometimes it’s necessary to call in professionals. Complete our online contact form and let us know about your financial needs. Our team of experts is waiting to help you find your financial solutions right now!