A classic case of the government giveth and the government taketh away.
One of the most common web-search phrases entered is this: “Is social security taxable”? The answer: It all depends on your income and filing status. If you file taxes as an individual and your combined income — that’s your adjusted gross income plus one half of your annual Social Security benefit — is less than $25,000, you won’t pay federal income taxes on your benefits.
But once you get past that $25,000 mark, that’s when you start seeing taxes. People who earn between $25,000 and $34,000 could have up to half of their benefits taxed, and people who earn more than $34,000 could see up to 85% of their benefits taxed.
Things are slightly different if you’re married. Married couples with a combined income of less than $32,000 won’t see their benefits taxed at all.
What If You Owe The IRS?
The Federal Payment Levy Program (“FPLP”) allows the IRS to levy 15% of your Social Security benefit payments to pay your delinquent tax debt. Mind you that the gross amount of the benefits is still considered as potentially taxable by the IRS.
Before your Social Security benefits are included in the FPLP, the IRS will send you a Final Notice Of Intent To Levy. This notice is only issued once and provides valuable appeals rights. You have 30 days from the date of this notice to make arrangements to pay your tax debt before the IRS will begin deducting 15% from your monthly benefit.
Keep in mind that the IRS is not just limited to levying social security benefits but can levy other sources of income, issue bank levies and file tax liens. Remember the IRS wants to collect its money as quick as possible.
The Final Notice of Intent to Levy and Notice of Your Right to A Hearing is your last warning before the IRS starts levy action. The IRS will give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested. You do not want to ignore this notice.
Don’t Take The Chance And Lose Everything You Have Worked For!
Protect yourself. If you are in danger of wage garnishments or bank levies or having a tax lien placed against your property, stand up to the IRS and your State Tax Agency by getting representation. Tax problems are usually a serious matter and must be handled appropriately so it’s important to that you’ve hired the best lawyer for your particular situation.
Original Post By: Jeffrey Kahn