Can the IRS garnish your Social Security disability check?
Financial stability is often fragile for the millions of Americans on Social Security Disability Insurance (SSDI). Every dollar counts when managing medical bills, housing and daily living expenses and many of those who cannot work due to disability rely on SSDI as their primary source of income. So, if you receive these types of benefits and owe back taxes to the Internal Revenue Service (IRS), you might be wondering whether the IRS can take a portion of your disability benefits to settle your tax debt.
The idea of losing part of your SSDI check to the IRS can be unsettling, especially if you're already struggling to cover basic expenses, but there's good reason for this concern. While private creditors have limited power to touch SSDI benefits, the federal government operates under different rules — and that includes the IRS. This leaves many SSDI recipients worried about whether the IRS can dip into their much-needed monthly payments when they're behind on their taxes.
And, the relationship between tax debt and disability benefits involves federal regulations that have evolved over time, making this landscape even tougher to navigate. So, if you're concerned about losing a portion of your SSDI benefits to the IRS, it's important to know what the agency can and cannot do when it comes to garnishing your disability payments.
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Can the IRS garnish your Social Security disability check?
The short answer is yes, the IRS has the legal authority to garnish your Social Security disability benefits if you owe federal taxes. However, there are significant limitations in terms of the IRS' legal authority to levy these benefits. This power is restricted by the Federal Payment Levy Program (FPLP), which places important caps on how much can be taken.
Under current law, the IRS can garnish up to 15% of your monthly Social Security disability payments through the FPLP. This applies to both SSDI and SSI benefits, though in practice, SSI recipients are rarely affected, as they typically receive lower benefit amounts and are more likely to qualify for financial hardship status.
That said, it's important to understand that this 15% maximum is calculated based on your gross monthly benefit before any deductions like Medicare premiums. For example, if your monthly SSDI payment is $1,500, the maximum the IRS could potentially garnish would be $225, leaving you with $1,275 (before other deductions).
There are exceptions to this garnishment authority, though. If your income falls below certain thresholds indicating financial hardship, you may qualify for protection from IRS levies entirely. Or, if you're on an approved payment plan with the IRS and making your agreed payments, your disability benefits should be safe from garnishment.
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What to do if the IRS is garnishing your disability benefits
If you're already experiencing garnishment or have received a notice of intent from the IRS, don't panic. There are options available to help you resolve the situation. Here's what you can do:
- Verify the debt: First, verify the debt to confirm that you legitimately owe the amount the IRS claims, as errors can occur in tax calculations or reporting. You can request an account transcript from the IRS to review your tax history.
- Apply for "Currently Not Collectible" status: If you are struggling financially and cannot afford to have any portion of your SSDI check taken, you may qualify for "Currently Not Collectible" (CNC) status. This temporarily halts IRS collection efforts, including garnishment, until your financial situation improves.
- Set up an installment agreement: The IRS allows taxpayers to pay off their debt over time through monthly installment plans. If you can afford a manageable payment each month, this could be a way to prevent or stop garnishment.
- Seek an Offer in Compromise: This option allows you to settle your tax debt for less than the full amount owed. The IRS considers factors such as income, expenses and asset equity before approving an Offer in Compromise (OIC). While difficult to obtain, an OIC could provide significant relief if you qualify.
- Consult a tax relief service: Professional tax relief services specialize in negotiating with the IRS on behalf of taxpayers. These experts can help you explore options like CNC status, installment agreements or OICs. While there is a cost associated with these services, they can provide valuable guidance and potentially save you money in the long run.
The bottom line
If you're receiving Social Security disability benefits and owe back taxes, the IRS does have the authority to garnish a portion of your payments — but they can't take it all. Your Social Security disability benefits are there to support your basic needs, and knowing your rights and available options can make a significant difference in how you handle the situation. Ignoring IRS notices, though, can lead to serious consequences, including ongoing garnishment, additional penalties and interest accumulation. So it's important to be proactive to avoid additional financial issues.
