Delving into the intricate landscape of debt collection, many taxpayers might be surprised to discover that their cherished Social Security benefits are not entirely shielded from the IRS. While the majority of private creditors can’t touch these funds, the government has specific provisions in place.
Can the IRS Take Your Social Security Check?
The IRS, under certain conditions, does have the authority to garnish your Social Security benefits. This is applicable primarily to the Social Security disability program payments, retirement payments, and survivor payments. Let’s break it down:
- While private creditors can’t usually garnish Social Security benefits, exemptions for tax liability exist as per Title II of the Social Security Act and Section 6331 of the IRS Code.
- The IRS has the capacity to garnish up to 15% of your benefits. So, if you’re entitled to $1,000, they could take up to $150.
- However, lump-sum death payments, children’s benefits, and Supplemental Security Income (SSI) remain untouched by the IRS.
Yearly, the IRS adjusts its guidelines. For instance, as of 2018, a single individual with one exemption can retain $887.50 monthly, while married individuals filing jointly with two exemptions can hold onto $1,775 every month.
How To Know if Your Social Security is About To Be Tapped by the IRS
If you’re worried about the IRS making a move on your Social Security, there are signs you should be on the lookout for:
- The IRS will send you a “Final Notice – Notice of Intent to Levy and Notice of Your Right to a Hearing.”
- Following this, you have a 30-day window to respond. You can:
- Settle the tax
- Discuss alternative payment methods
- Apply for non-collectible status due to hardship
- Initiate an appeal
- Or, if you decide to ignore the warning, after 30 days, the IRS will instruct the Financial Management Service (FMS) to begin deductions, and 15% of your Social Security will be deducted to offset your tax debt.
How to Avoid a Social Security Garnishment on Tax Debt From IRS
The best defense against garnishment is being proactive. Here are strategies to safeguard your Social Security:
| Protection Method | Description |
| Installment Agreement | If your debt is below $50,000, set up a monthly plan without detailed financial disclosure. For higher amounts, the IRS requires a Collection Information Statement. |
| Partial Payment Installment Agreement (PPIA) | Allows you to make monthly payments up to the collection statute expiration date. Financial disclosure is essential. |
| Offer in Compromise (OIC) | Pay a lump sum or installments over 24 months, less than your owed amount. You need to prove that’s all you can pay. |
| Currently Not Collectible (CNC) | If you demonstrate you can’t pay your tax, the IRS may label your account as CNC, pausing collection actions. |
Remember, always file your tax return, even if unable to pay. Penalties for not filing surpass those for not paying. Upon filing, you can request a payment plan, ensuring your Social Security remains untapped.
Takeaway
The financial sphere is complex, especially when debt is involved. While the IRS can garnish your Social Security to settle back taxes, there are mechanisms and strategies in place to help you navigate this predicament. Knowledge, timely response, and proactive measures can shield your hard-earned benefits. And, when in doubt, consider seeking advice from financial experts or tax professionals.
FAQs
1. Can I take money out of my Social Security?
The amount you get for early withdrawal depends on how far you are from the full retirement age. Withdrawing at age 62 means 25% (or 30% if born after 1960) less than your full benefits. Withdrawing at 63 sees a reduction of about 20%. Moreover, if you return to work after early withdrawal, you risk further reductions based on earnings. Make sure to consult your yearly Social Security Statement or check online at www.ssa.gov/retire to make an informed decision.
2. At what age do you get 100% of your Social Security?
If you begin benefits at age 66, you receive 100% of your monthly benefit. Delaying further sees an increase: 108% at 67 and 132% at 70. However, post-70, benefits stop increasing. Remember, even if delaying retirement, you should sign up for Medicare at age 65.
3. Can I take my Social Security at 62 and then switch to survivor benefits?
Yes, but with a caveat. You can’t strictly switch from your benefits to survivor benefits. If you claim higher survivor benefits later, the Social Security Administration pays your benefit plus a partial survivor benefit, equating to a higher survivor rate. If you’re considering this, it might be best to either:
- Claim reduced widow(er) benefits early and then switch to your record at age 70.
- Or, claim reduced retirement benefits on your record early and then file for unreduced widow(er) benefits at full retirement age (FRA).
