Can my Disability Payments be Garnished to Cover Back Taxes?
If you owe the Internal Revenue Service back taxes, your disability benefits may be used to pay back some of those taxes in a process called garnishment.
Garnishment is a process by which a person’s income may be seized in order to meet a tax debt. That income may include not only your salary, but also other forms of income including your retirement account, rental income if you have any, dividends, and other sources of income. Unfortunately, it may also include the Social Security disability payments that you receive every month. If you owe the IRS back taxes and are currently on disability, your disability payments may be used to satisfy the debt.
That is the bad news. The good news is that there is a limit on how much of your disability payments can be garnished to satisfy the debt. Typically, the Internal Revenue Service can only garnish up to 15% of your monthly disability checks. Moreover, the garnishment doesn’t happen by surprise, and you will receive advance warning before the garnishment begins. If you believe that the garnishment will place you in grave financial distress, talk to a professional to identify other strategies to satisfy your tax debt without having your disability payments impacted in any manner.
This wage garnishment should not be confused with taxes levied on your disability income. Generally, if the disability payments are your only income source, you will not be required to pay any income tax on these payments. The wage garnishment only applies to back taxes or taxes that you owe the Internal Revenue Service from the past. Moreover, any Supplemental Security Income benefits that you receive may not be garnished.