Financial stability is often fragile for the millions of Americans on Social Security Disability Insurance (SSDI). Every dollar counts when managing medical bills, housing and daily living expenses and many of those who cannot work due to disability rely on SSDI as their primary source of income. So, if you receive these types of benefits and owe back taxes to the Internal Revenue Service (IRS), you might be wondering whether the IRS can take a portion of your disability benefits to settle your tax debt.
The idea of losing part of your SSDI check to the IRS can be unsettling, especially if youre already struggling to cover basic expenses, but theres good reason for this concern. While private creditors have limited power to touch SSDI benefits, the federal government operates under different rules — and that includes the IRS. This leaves many SSDI recipients worried about whether the IRS can dip into their much-needed monthly payments when theyre behind on their taxes.
And, the relationship between tax debt and disability benefits involves federal regulations that have evolved over time, making this landscape even tougher to navigate. So, if youre concerned about losing a portion of your SSDI benefits to the IRS, its important to know what the agency can and cannot do when it comes to garnishing your disability payments.
Can the IRS Garnish Your Social Security Benefits?
Many Americans rely on Social Security benefits as a major source of retirement income. So what happens if you owe back taxes to the IRS? Can they take your Social Security benefits? Unfortunately the answer is yes, the IRS can garnish your Social Security payments to collect on unpaid tax debt. However, there are limits on how much they can take. Keep reading to learn more about IRS garnishment of Social Security benefits.
What the Law Says
Section 6331(h) of the Internal Revenue Code gives the IRS the legal authority to levy up to 15% of Social Security benefits to pay off tax debt. This includes Social Security retirement and survivor benefits, which are subject to the Federal Payment Levy Program (FPLP). Disability benefits used to be included but as of 2015 are no longer levied through the FPLP.
The FPLP is an automated system that the IRS uses to collect unpaid taxes. It allows them to directly levy various federal payments, including Social Security. Rather than sending you a paper notice and waiting for you to respond, the FPLP lets the IRS immediately garnish up to 15% of your Social Security benefits.
How Much Can They Take?
The IRS can levy up to 15% of your monthly Social Security benefits if you have unpaid taxes and the FPLP is in effect This remains the case even if the remaining amount you receive falls below $750 per month,
However, there are certain low-income exemptions. Your benefits cannot be levied at all if your total household income falls at or below the established Federal poverty guidelines set each year by the Department of Health and Human Services.
The IRS can also do a manual levy outside of the FPLP system. With a manual levy, the amount they can take depends on the number of exemptions you claim. For 2023, a single filer with no dependents could exempt the first $1,154 per month of Social Security benefits from levy.
Which Benefits Are Subject to Garnishment?
The IRS can garnish retirement and survivor benefits paid under Title II of the Social Security Act This includes
- Regular monthly retirement benefits
- Widow/widower benefits
- Spousal benefits
They cannot take Supplemental Security Income (SSI), lump sum death payments, or Social Security disability benefits.
Receiving Notice from the IRS
Before levying your benefits, the IRS must send you a Final Notice of Intent to Levy and Notice of Your Right to a Hearing. You then have 30 days to pay the balance due or make alternate arrangements before any garnishment begins. If you don’t respond, they will send a follow-up notice CP-91 or CP-298 before actually issuing the levy.
How to Prevent IRS Garnishment of Benefits
If you receive a notice about intent to levy your Social Security benefits, don’t ignore it. You have options to potentially stop your benefits from being garnished:
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Pay the Amount Owed – Pay off your tax debt in full and the levy will not be issued.
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Request a Collection Due Process Hearing – You can appeal the proposed levy and explain why it would cause financial hardship.
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Prove Financial Hardship – If your income is below a certain level, you may qualify for low-income protection from IRS garnishment.
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Enter into an Installment Agreement – Set up a monthly payment plan with the IRS to pay your tax debt over time. This will stop a levy.
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Request Currently Not Collectible Status – Tell the IRS you cannot afford to pay anything right now. They may put your account on hold if you meet requirements.
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Offer in Compromise – Lump sum or monthly payment that settles your tax debt for less than the full amount owed. Prevents collection action if approved.
Get Help from a Tax Professional
Trying to deal with the IRS on your own can be intimidating and confusing. Speaking with a tax professional gives you an advocate on your side. They can review your case and financial situation to come up with the best strategy. A tax pro can also communicate with the IRS on your behalf.
Don’t Wait to Address IRS Tax Debt
If you receive an IRS notice about unpaid taxes, you should take action right away. Waiting until your Social Security benefits are already being garnished will limit your options. By proactively communicating with the IRS, you can often work out a reasonable resolution. If you need help dealing with the IRS, meet with a tax relief professional. With the right approach, you may be able to avoid garnishment of your Social Security payments.
What to do if the IRS is garnishing your disability benefits
If youre already experiencing garnishment or have received a notice of intent from the IRS, dont panic. There are options available to help you resolve the situation. Heres what you can do:
- Verify the debt: First, verify the debt to confirm that you legitimately owe the amount the IRS claims, as errors can occur in tax calculations or reporting. You can request an account transcript from the IRS to review your tax history.
- Apply for “Currently Not Collectible” status: If you are struggling financially and cannot afford to have any portion of your SSDI check taken, you may qualify for “Currently Not Collectible” (CNC) status. This temporarily halts IRS collection efforts, including garnishment, until your financial situation improves.
- Set up an installment agreement: The IRS allows taxpayers to pay off their debt over time through monthly installment plans. If you can afford a manageable payment each month, this could be a way to prevent or stop garnishment.
- Seek an Offer in Compromise: This option allows you to settle your tax debt for less than the full amount owed. The IRS considers factors such as income, expenses and asset equity before approving an Offer in Compromise (OIC). While difficult to obtain, an OIC could provide significant relief if you qualify.
- Consult a tax relief service: Professional tax relief services specialize in negotiating with the IRS on behalf of taxpayers. These experts can help you explore options like CNC status, installment agreements or OICs. While there is a cost associated with these services, they can provide valuable guidance and potentially save you money in the long run.
If youre receiving Social Security disability benefits and owe back taxes, the IRS does have the authority to garnish a portion of your payments — but they cant take it all. Your Social Security disability benefits are there to support your basic needs, and knowing your rights and available options can make a significant difference in how you handle the situation. Ignoring IRS notices, though, can lead to serious consequences, including ongoing garnishment, additional penalties and interest accumulation. So its important to be proactive to avoid additional financial issues.
Angelica Leicht is the senior editor for the Managing Your Money section for CBSNews.com, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications.
Can the IRS garnish your Social Security disability check?
The short answer is yes, the IRS has the legal authority to garnish your Social Security disability benefits if you owe federal taxes. However, there are significant limitations in terms of the IRS legal authority to levy these benefits. This power is restricted by the Federal Payment Levy Program (FPLP), which places important caps on how much can be taken.
Under current law, the IRS can garnish up to 15% of your monthly Social Security disability payments through the FPLP. This applies to both SSDI and SSI benefits, though in practice, SSI recipients are rarely affected, as they typically receive lower benefit amounts and are more likely to qualify for financial hardship status.
That said, its important to understand that this 15% maximum is calculated based on your gross monthly benefit before any deductions like Medicare premiums. For example, if your monthly SSDI payment is $1,500, the maximum the IRS could potentially garnish would be $225, leaving you with $1,275 (before other deductions).
There are exceptions to this garnishment authority, though. If your income falls below certain thresholds indicating financial hardship, you may qualify for protection from IRS levies entirely. Or, if youre on an approved payment plan with the IRS and making your agreed payments, your disability benefits should be safe from garnishment.
Can the IRS Garnish Social Security?
FAQ
How much of Social Security can the IRS garnish?
Garnishment and Levy Laws
Section 1024 of the Taxpayer Relief Act of 1997 (Public Law 105-30) authorizes the IRS to levy up to 15% of each Social Security payment for overdue Federal tax debts until the tax debt is paid.
How do I stop the IRS from garnishing my Social Security?
- Ignore the Notice.
- Pay the back taxes.
- File an appeal.
- Negotiate a payment plan or submit an Offer-In-Compromise.
- Apply for non-collectible status.
- File bankruptcy.
Can IRS go after Social Security benefits?
The short answer is yes, the IRS has the legal authority to garnish your Social Security disability benefits if you owe federal taxes. However, there are significant limitations in terms of the IRS’ legal authority to levy these benefits.
What debts can be garnished from Social Security?
Can SSI be garnished?
Supplemental Security Income (SSI) is expressly protected and may not be garnished for private or federal debts, including back federal income taxes. One of the only reasons SSI benefits may be garnished would be to pay back the Social Security Administration if benefits were previously overpaid to the recipient.
Can the IRS garnish social security?
While this is a less common method of collecting on a past-due debt, the IRS still has the ability to garnish social security funds. The IRS can garnish up to 15% of Social Security through the Automated Federal Payment Levy Program (FPLP). If the garnishment is manual, rather than automatic, there is no limit on what can be garnished.
Can Social Security benefits be levied or garnished?
129.2 Can your Social Security benefits be levied or garnished? If you have any unpaid Federal taxes, the Internal Revenue Service can levy your Social Security benefits. Your benefits can also be garnished in order to collect unpaid child support and or alimony.