Business & Finance Bankruptcy

Reasons Why Your Wages Could Be Garnished

    Tax Levy

    • A tax levy can be placed on a person by the federal government if that person has failed to pay the taxes associated with estates, gifts or income. If these taxes are not properly reported and paid, or if an individual fails to file his income tax return altogether, then the IRS can issue an IRS Wage Levy to collect. Note that the IRS normally sends multiple letters informing citizens that they have not filed or are suspected of not accurately declaring their income and due taxes in an appropriate manner or time frame. If no response is given, the levy will be imposed. Though the IRS can garnish up to 90 percent of an employee's wages, Wage Garnishment Help notes that it usually garnishes between 80 percent and 85 percent of an individual's net pay--still a very significant amount.

    Back Alimony and Child Support

    • One of the most common reasons an employer must garnish his employee's wages is because that employee has failed to pay his alimony or child support on time and in adequate sums. Alimony is a monthly payment that the judge can order a former spouse to pay to his ex-spouse for that person to maintain her lifestyle after the divorce. Like alimony, a judge can order one of the divorced parties to provide monthly support to the other for any shared children. An employer may garnish up to 50 percent of his employee's wages in some states if back alimony and child support is owed.

    Defaulted Student Loans

    • According to the Department of Education, 10 percent to 15 percent of all student loan borrowers fail to pay back their loans. The DOE also notes that the majority of these defaulters are employed and able to pay back these loans. Therefore, the DOE must intercept this money from the former students' employers. As of June 3, 2009, an employer can withhold 15 percent of his employee's disposable pay as repayment for the outstanding student loans, which is then turned over to the DOE.

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