How much money can the IRS garnish from my paycheck?

Posted by Michael S. Anderson | Apr 19, 2016 | 0 Comments

The most an Arizona creditor with a judgement can garnish from your paycheck is 25%.  The IRS is a different animal and isn't subject to Arizona's exemption laws.  As a result, it can garnish much more.  In some cases, the majority of the paycheck can be taken.  (See IRS wage levy info page)

In 2015, a parent with two children filing as head of household was able to protect about $410.00 in pay every week.  If they earn $1500.00 per week, the IRS would have taken $1090.00.

So, it is important that if you've received a wage levy from the IRS that you take care of it.

You should do the following:

Make sure all required tax returns are filed

The IRS doesn't have to stop the garnishment unless you are in what they call “compliance”.  Compliance begins with making sure all required returns are filed.  This doesn't mean you have to file every return that is missing necessarily.  Most un-filed returns older than 6 years don't have to be filed for purposes of compliance.

Complete a financial statement

The IRS will reduce the amount that is being garnished or eliminate the garnishment altogether if you complete a financial statement.  Some situations require a 433-f and some require a 433-a.

The IRS will use the financial statement along with it's own budget to determine how much they think you can pay each month.

Knowledge about how the IRS calculates income and budget is good to have before you finalize the financial statement.

Contact the IRS to arrange a payment agreement or non-collectible status arrangement

What type/size of payment plan you end up with will depend on the facts of your case.   There are different ways the IRS will calculate a payment plan, some based on time and some based on finances.  


Certain tax debts are dischargeable in bankruptcy.  Certain other debts are dischargeable in bankruptcy.  Bankruptcy stops the IRS garnishment.  Whether you use bankruptcy or not and whether you use a chapter 7 bankruptcy or a chapter 13 bankruptcy will depend on the facts of your case.  Sometimes bankruptcy makes the most sense given your situation even if the tax debt isn't going to be discharged.

The first step of many in determining whether bankruptcy will make sense is to get a copy of the IRS transcript(s) regarding the tax debt you owe.  This transcript is usually called an IRS “account transcript”.

In order to obtain the transcripts quickly, you can call the IRS, or walk into the local IRS office and request them.

We can also obtain them for you.

About the Author

Michael S. Anderson

Michael Anderson has been representing Arizona clients with tax debt problems for two decades and has helped his clients eliminate millions of dollars in tax debt. His tax debt practice is limited to helping individuals and the self-employed who have serious IRS problems.


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