How to Stop an IRS Wage Garnishment

By Becky Schmitz

Maybe you haven't paid taxes in years, perhaps you were busy and simply forgot one year, possibly you avoided paying taxes for financial or emotional reasons. Whatever the reason, you are now threatened with an Internal Revenue Service (IRS) wage garnishment. Wage garnishment requires an employer to withhold part of a person's earning for the purpose of the person to pay off a debt. In addition to the IRS, wage garnishment can also be issued by courts and federal agencies. Wages garnished can include salaries, wages, bonuses and commissions as well as retirement or pension earnings.

How Wage Garnishment Works

• First, the IRS will send a Notice and Demand for Payment.
• If the taxpayer does not pay the tax or ignores the notice, the IRS will send a Final Notice at least 30 days before the wage garnishment.
• The Final Notice may be served by the IRS in person, at the taxpayer's home or usual place of business, or the taxpayer's last known address by certified or registered mail. The IRS is only required to send the notice to the last address it knows for the recipient; the taxpayer does not need to receive the notice in order for it to be valid. Because the IRS may not have a current address for some taxpayers (such as those who have not paid their taxes in a while), many taxpayers see their wages garnished without receiving a notice. The notice will be on intent to garnish wages and the recipient's right to a hearing.
• By federal law, wage garnishments are restricted to 25% of an employee's disposable income if employee disposable earnings are more than 30 times the federal minimum wage. Several states, however, have a maximum garnishment level that is lower than 25%.

What Employers Should Know About Wage Garnishment

• A notice is sent to the taxpayer's employer, telling the employer to withhold a certain amount of the taxpayer's wages and pay it directly to the IRS.
• The employer is not allowed to refuse the wage garnishment. Should an employer refuse in garnishing an employee's wages, the employer can be held personally liable for money that was not received by the IRS.
• Wage garnishments are taken out of payroll. There is a particular order garnishments are taken out: first federal tax, then local tax, last other garnishments like from credit cards.
• An IRS wage garnishment will continue until the entire tax debt is paid or other arrangement is made to pay off the tax debt.

How to Avoid Wage Garnishment

• Be sure to contact the IRS as soon as an Intent to Levy or Notice of Levy letter is received.
• Make an appointment with the IRS. Setting up an agreement with the IRS right away will most likely be easier than dealing with the embarrassment of having your employer receive an "Order to Withhold Taxes" letter from your wages. The financial burden placed upon you with a wage garnishment may also be greater than if you just entered into an agreement with the IRS to begin with.
• Get a tax specialist involved. Tax professionals can contact the IRS to negotiate stopping a wage garnishment. The next steps after getting a wage garnishment is released is setting up a repayment plan or getting an offer in compromise settlement.

The best solution to avoiding the problems of wage garnishment is to pay taxes in full, on time and not have to worry about it in the first place. If you find yourself facing wage garnishment, keep working until taxes are paid so you can sleep sound or seek the counsel of a tax specialist who may be able to help with getting the wage garnishment released and negotiating a repayment plan or getting an offer in compromise settlement.

Becky Schmitz is a certified tax resolution specialist and enrolled agent. Named 2006 Top Practitioner by the American Society of Tax Problem Solvers, she is the owner of Centsable Accounting, a tax problem resolution company serving Montana, Wyoming, North Dakota and South Dakota. Centsable Accounting offers many resources for dealing with wage garnishment assistance including information on offers in compromise and installment agreements Read more information on wage garnishment at http://www.centsableaccounting.com/wage-garnishments

Article Source: http://EzineArticles.com/?expert=Becky_Schmitz

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Converting IRA to Roth IRA- Make a decision and reap the benefits

By: Frank Vanderlugt

Converting IRA to Roth IRA is a financial decision that requires a careful assessment of your financial state and tax implications of the move. If you hold an existing Individual Retirement Account or IRA in short, it makes sense for you to convert the account to Roth in a number of cases.

Roth IRA is different from the traditional IRA in the sense that you have to pay taxes at the time of making contribution and not at the time you decide to make a withdrawal subject to fulfillment of certain conditions. Thus in a Roth IRA, you pay income tax as you make contribution to the account and not at the time of your retirement when you need the money most.

Whether or not to convert your traditional IRA to Roth requires careful analysis of your financial status and tax effects of the move. This is because the normal IRA contributions are tax exempt to certain extent and if you want to convert, you have to pay taxes on the corpus of your IRA.

The tax liability has to be met at the time of conversion itself and can not be deferred. Moreover it makes more sense that you have cash with you at the time of conversion rather than eating into the corpus of your IRA funds to pay taxes. If you do not have enough funds to pay the taxes, you can also opt for partial conversion of IRA to Roth IRA.

One more factor worth considering at the time of converting IRA to Roth IRA is that you can not avoid taxes simply by converting non tax deductible contributions to IRA and keeping your tax deductible contribution intact. As per rules, the entire IRA corpus is divided proportionately on deductible and non deductible at the time of conversion and tax liability is computed accordingly.

Converting IRA to Roth IRA is a big decision and you may consult a tax or financial expert to further gain guidance on the issue. This is because the implications are many and sometimes quite complex and may need to be assessed in light of the complicated procedures and set of rules framed by IRS to discourage unfair practices and rogue Roth schemes.

Your income levels also constitute a deciding factor as you can convert only in case your adjusted Gross Income is less than or equal to 100,000 US $ during the year of converting IRA.

If you try to claim deductions from your income which are disallowed later by IRS, you may have to shell out heavy penalties and costs for illegitimate conversion. So make a careful assessment. Converting IRA to Roth IRA has done wonders to the financial position of a large number of investors. Try to figure out where you stand.

Frank j Vanderlugt owns and operates http://www.roth-ira-2007.com Roth Ira

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