Wage and 1099 Garnishment

Salary garnishment is a tough circumstance for people who are in debt: the creditors collect their payments directly from their paychecks. For a number of reasons, people can have their salary garnished.

When a verdict is made, salary can then be garnished or taken directly from a person’s paycheck or other sources of income. For these reasons, salary can be garnished:

* Unpaid child support.
* Taxes are unpaid.
* Court fines unpaid.
* Student loans in arrears.
* Debt to credit card companies.
* Other dues.

Garnishment is capped by federal law at twenty-five percent and differs in each state. States like Pennsylvania, North and South Carolina, and Texas don’t allow garnishment, while others allow lower amounts for garnishment. If income is not enough, there is a specific order for garnishments to be taken: federal, then state, and lastly, credit cards.

The IRS procedure that must be followed when garnishing wage are:

*
* A Notice or Demand for Payment should be served.
* At least thirty days prior to garnishment, a Final Notice is sent. These do not need to be served personally, so a lot of people do not get it and don’t know that their wages are about to be garnished.
* Salary is garnished until full payment, unless other deals for settlements are made. Garnishment cannot be declined.

1099 is the form that’s provided to private contractors, like writers, actors, and artists who are not employees of particular companies. If a company pays a freelancer $600 or more in a year, they should file a 1099 form. These declare income to the IRS. They do not deduct any taxes or withholdings, so the 1099 freelancers should deduct the taxes themselves.

If an employee has his salary garnished, the employer has the responsibility to take the payment out of the paycheck. The employer is released from that responsibility if the employee becomes a 1099 independent contractor or freelancer. The contractor’s accounts receivable can be levied by the credit, rather than garnishing wage. This means that when a private contractor gets a check from a company for work, the bank account can be levied.

The IRS and other creditors can freeze and collect money when a bank account is levied. This can be practiced until the dues are resolved.

Having your salary garnished or your bank account levied is tough. To help you with IRS problems, talk to seasoned lawyers like Darrin T. Mish.