What Is a Wage Garnishment?

On: May 15, 2020

Wage garnishment happens when the government instructs a U.S. business to withhold money from an employee’s monetary compensation (including salary) and send it directly to the creditor whom they owe. This usually occurs as a result of a court order. Wage garnishments may continue until the entire debt is paid or otherwise resolved. Employers must correctly calculate the amount to withhold from your paycheck and must make the deductions until the debt is paid off. Wage garnishments can be taken for any type of debt, but typical examples include:

• Child support and alimony
• Consumer debts
• Student loans
• Unpaid court costs

If you fail to pay your tax debt, the IRS can garnish your wages, and if you default on federal loans, the U.S. government can garnish your wages. Your wages can also be garnished if you fail to pay alimony or child support. If you want to protest a wage garnishment, you can hire a tax attorney here. Wage garnishment can negatively affect reputation, credit, and the ability to open a bank account or even to receive a loan.

Wage Garnishments for Child Support and Alimony

All new or modified child support orders include an automatic wage withholding order since 1988. Once you are given an order by the court to pay child support, your employer receives a copy of the order sent by the court or the child’s other parent, who cannot refuse to withhold the ordered amount from your paycheck and send it to the other parent. Your child’s health insurance is deducted from your wage as well. Half of your disposable earnings may be garnished to pay child support if you are currently supporting a spouse or a child who isn’t the subject of the order, but up to 60% of your earnings may be taken if you aren’t supporting a spouse or child. An additional 5% may be garnished if you are more than 12 weeks in arrears. You cannot be fired, criticized, or otherwise penalized because your pay is subject to a wage withholding order to pay child support.

Wage Garnishments for Student Loans

If you are in default on a student loan, the U.S. Department of Education can garnish up to 15% of your pay. No court order or a lawsuit is required for this type of wage garnishment. Your wage will be garnished if you are in default. Any agency can garnish 15% of your wage on behalf of the U.S Department of Education. You must be notified in writing at least a month before the garnishment is set to begin. The notification includes the following:

• how much you have to pay
• how to get a copy of records involving the loan
• how to sign up for a voluntary repayment schedule, and
• how to plead for a hearing on the proposed garnishment.

Wage Garnishments for Back Taxes

If you owe IRS some money, you have to be very careful as the agency can take a significant part of your wage without needing a court order first. Your employer most probably will give you a relatively meager amount each month and provide a fairly substantial amount to the IRS.  The part of your wage you get to keep depends on how many dependents you have and your average deduction amount. Your employer will receive a wage levy notice from the IRS, who is required to give you a copy of the notice. The notice has an exemption claim form, which you should complete and return in time. State and local tax agencies also have the legal right to take some part of your wages. In many states, there is a limitation by law on how much the taxing authority can take. In the United States, it is a criminal offense to fire an employee to avoid handling a levy. And always make sure to call Leading Tax Group and don’t attempt to do it yourself.