LA Business Daily

Ok so when the IRS says they are going to take 25% of my disposable income?

what does that mean. I make about 4200 month. How do they know what my disposable income is ? they are going to garnish my wages to settle a debt for 5265.00 and want to take 25% of my disposable income of each paycheck. I make about 4200 a month. So whats my disposable income. No, I had a installment agreement but a check came back NSF. By mistake of course and it automaticlly took me out of the installment agreement. So now what.

Public Comments

1. I think I know what you are trying to ask but am not sure that you do. Why don't you try again and elaborate a bit. Since you have clarified the question, here is a straight answer: IRS won't take 25% of your disposable income; that is the percentage that an ordinary garnishment takes. It will take everything over the standard exemption. You don't state what your family situation is but if you are single, you will take home $745.83 out of your $4,200.00 monthly until the balance is paid unless you can come to terms first.
2. You can look at the irs.gov website for a more precise statement of how they calculate it but it is basically your take-home pay before any voluntary deductions. IRS doesn't get to this point unless the taxpayer has ignored them. Now you will have no choice but to clear this debt.
3. They have a standard amount after subtracting taxes that they will take from you, after stuff like housing and food. I would go to a debt collection site to get a better idea.
4. There is a standard chart based on your exemptions that determines what you get to keep. It isn't much. The IRS takes the rest. You will get a much better arrangement if you try to reinstate your installment agreement. You need to call the contact person on the letters you received. You may need to give them a 433-A, collection statement for individuals (financial information) although, for the amount you owe, it isn't really necessary.
5. 25% ? your getting ripped off! Get a good tax lawyer and sue the irs. I did and got 45,000 dollars .
6. The IRS doesn't take a percentage, although some states (such as California) do. The IRS exempts a certain amount of your income based on your filing status and exemptions. See Publication 1494 at the IRS web site. But the easisest way to avoid this is to simply call the IRS and re-establish your installment agreement. They will then release the levy. You might want to consider a payroll deduction agreement (if your employer agrees to it) as that ensures payments are made timely.