How much will the IRS take from my check? Will they take my bonus? How long will the wage levy be in place? These important questions and many more plague taxpayers who receive a notice of levy from the IRS.
First things first; the IRS only requires your employer to withhold part of your wages. Rest assured that you will continue to receive much of your monthly wages. However, the garnishment will remain in place until the back-tax debt has been paid off completely. The levy may be released if other payment arrangements are agreed to by the IRS, as well.
Part of your wages is off-limits, and your employer receives instructions for determining how much to withhold from your paychecks every month. They’re instructed to determine the amount to withhold by providing you with a form to complete. This is called a Statement of Dependents and Filing Status, and it must be completed within three days.
It asks for information about the dependents you claim for the year in which the levy is issued. If you don’t return the statement to your employer within three days, they’re instructed to calculate IRS withholdings as if you’re married, filing separately with no dependents. This is to allow you to pay for your basic needs, such as food and rent, as well as those of your dependents.
If you have other sources of income, the IRS “may allocate the exemptions to the other income source and levy on 100% of the income from a particular employer.” The amount exempted from withholdings applies to all your income sources combined. Any income earned outside the exempted amount will be sent to the IRS. That extra bonus you might’ve been looking forward to before the levy, is now going to be applied to your back-tax debt.