Owing back taxes to the IRS can be stressful. It is understandable to feel overwhelmed not only by owing back taxes but also by the amount of information out there about what to do about it.
Paying back taxes
It is critical to understand the importance of paying back taxes while at the same time knowing that the IRS provides payment options and is willing to collaborate with you. You are not the only one who owes back taxes; you will not be the last.
It is critical to know your options for paying back taxes, what to do if you cannot afford it right now, and how to get back on the right track with the IRS.
In certain situations, the IRS can garnish your wages, money in your bank account and other assets, like your car, any real estate you own and other personal property.
Most people do not consider retirement funds when they think of IRS garnishments. Still, it is critical to know that the IRS can and does have the right to garnish funds from retirement accounts if a person owes back taxes.
Examples of types of retirement accounts that the IRS can garnish from:
- Self-employment plans
In addition, the IRS can garnish up to 25% of your retirement funds until you pay back your back taxes.
Notification of garnishment
Suppose the IRS decides to take money from your existing retirement accounts. In that case, they will send you a notification of delinquency. You can speak with them and potentially negotiate a settlement, so your retirement funds remain untouched.
It is critical not to ignore correspondence from the IRS because that could be the only opportunity you have to potentially stop them from garnishing money from your retirement accounts before they go ahead and proceed.
Suppose you need assistance with managing your back taxes. In that case, tax law experts are available to help you understand how the entire process works and your options.