Can you collect Social Security if you owe back taxes?

Social Security benefits are a crucial part of retirement planning for millions of Americans. These benefits provide a steady source of income, helping people cover essential expenses in their later years, so the prospect of losing some or all of this crucial retirement income can be stressful. Still, that is a real concern for those who are dealing with debt issues, like back taxes owed to the Internal Revenue Service (IRS). 

Back taxes can be a hefty burden for nearly anyone, but especially those living on a fixed income. So, if you aren’t able to pay yours off, you may be wondering whether it could have an impact on your Social Security benefits. The IRS has powerful collection tools at its disposal, and it can garnish wages and income to resolve issues with back taxes, so it makes sense that the agency could also come after these types of benefits to collect what you owe. 

But can your IRS tax debt get in the way of you collecting your Social Security payments — or is this type of income protected from garnishment? That’s what we’ll discuss below.

Tackle your tax debt before the IRS starts the levy process.

Can you collect Social Security if you owe back taxes?

The straightforward answer is yes — you can collect Social Security benefits even if you owe back taxes. However, this comes with important qualifications. 

The Federal Payment Levy Program (FPLP) grants the IRS the authority to levy (garnish) up to 15% of your Social Security benefits to satisfy delinquent tax debt. This program, established by the Taxpayer Relief Act of 1997, allows the IRS to automatically reduce your monthly benefit payments until your tax debt is satisfied. That may seem high, but this 15% cap is a significant protection for benefit recipients, as many other forms of income can be garnished at much higher rates. Social Security benefits, on the other hand, receive special consideration under federal law. 

It’s also important to note that certain beneficiaries receive additional protections. If you receive Social Security Disability Insurance (SSDI) benefits, the same 15% maximum levy applies in many cases. However, Supplemental Security Income (SSI) benefits — which are needs-based payments for elderly, blind or disabled people with limited resources — are completely exempt from levy for back taxes.

Low-income beneficiaries may also receive protection through a filter in the FPLP that prevents levies on accounts where the taxpayer’s income falls below certain thresholds. This ensures that the Social Security recipients who are the most financially vulnerable retain their full benefits even with outstanding tax obligations.

The levy process doesn’t happen without warning, either. Before implementing a Social Security levy, the IRS must send several notices, including a Final Notice of Intent to Levy. This notice provides 30 days to respond before the levy begins. During this period, you have the right to request a Collection Due Process hearing to dispute the levy or arrange alternative payment solutions.

Start getting rid of your delinquent tax debt today.

Can a tax relief service help me get rid of my back taxes?

If you’re struggling with unpaid taxes and worried about your Social Security benefits being garnished, working with a tax relief service can provide a path to financial stability. These services specialize in negotiating with the IRS to reduce tax debt, establish manageable payment plans and protect taxpayers from aggressive collection efforts.

For example, tax relief services may be able to help you qualify for an Offer in Compromise (OIC), which is a program that allows qualified taxpayers to settle their tax debt for less than the full amount owed. If you qualify, you could significantly reduce your tax burden and prevent further garnishment of your Social Security benefits.

Another option is setting up an IRS installment agreement, which allows you to pay off your tax debt over time in smaller, more manageable monthly payments. This can help reduce financial strain and may prevent the IRS from levying your Social Security benefits. These tax relief professionals may also be able to assist you with a penalty abatement, which removes certain fines and fees associated with late or unpaid taxes.

The bottom line

Owing back taxes does not mean you will lose your Social Security benefits entirely, but it does put you at risk of having a portion of them garnished. In many cases, the IRS can legally take up to 15% of your benefits to satisfy your unpaid tax debt, which can create financial difficulties for retirees and those on fixed incomes. 

If you find yourself struggling with back taxes and are concerned about your Social Security income, seeking assistance from a tax relief professional can be a wise decision. These experts can help negotiate with the IRS, explore debt reduction options and protect your financial future. Whatever route you choose, though, be sure to address your tax debt issues as soon as possible to ensure that you receive the full benefits you’re entitled to in retirement.

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Stephen Collopy

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