It may seem unfair that the IRS would go after a Military veteran who was wounded in the line of duty, but the fact of the matter is, people who have served in the Military are still taxpayers. The IRS has the legal right to collect taxes from anyone who has not paid their taxes, including disabled veterans.
What is VA Disability Compensation?
A veteran who is injured in the line of duty qualifies for disability benefits. The amount they are awarded is based on how badly they were injured and the number of dependants they have. The benefits are tax free, but they are not free from IRS garnishment if they owe back taxes. The IRS has the legal right to take up to 15% of their monthly disability benefits.
As with any other public assistance money, veterans rely on these benefits as their source of income. Many of them cannot work, so disability benefits may be their only source of income, and if they are helping to support a family, those checks put a roof over their heads and food on the table. However, that is not the IRS’s concern.
If a veteran owes taxes to the IRS, they will use every legal means to collect. The ironic thing is, they are the once writing those disability checks, so the Treasury Department will just send less money every month. This is known as an IRS levy. Normally, it refers to back account levies or wage garnishments, but it can be done with disability benefits, as well.
Types of wage garnishment
The IRS doesn’t only go after working people, despite the fact that it’s called “wage” garnishment. Any income you receive is considered wages, so the IRS is within its legal right to take disability benefits, as well. The IRS can even issue a levy on Social Security benefits, social security disability and VA compensation disability benefits.
Talk to a tax professional about garnishments
Sadly, there are still millions of Americans who owe back taxes to the IRS. Some of them have simply cheated the IRS, but the majority of them are good, hard working people who simply cannot afford to pay their taxes. And, since disabled veterans generally are unable to work, they have no way to pay the debt. Instead of forgiving the debt, the IRS takes the benefits from the only income they have, their disability checks, and they are legally able to do so.
The good news is that, by law, the IRS can’t take a person’s whole check. Only 30 years ago, this was not the case. Today, however, they must leave you with enough to live on and not enough to put you in financial ruin. There are ways to put the garnishments on hold, but the only way to do that is by contacting an experienced tax professional. Once you have begun to comply with the IRS to repay your back taxes, the garnishments generally stop. Again, a tax professional will help you with each step of the process so you can get free of the garnishment. And don’t believe the ads you see that claim to be able to completely eliminate your tax debt. This very rarely happens. The only way to get rid of the debt completely is with lots of paperwork and lots of proof. Once again, the advice of a tax professional will benefit you if you do choose to take this route.
A tax advisor will help you fix your tax problem and contact the IRS on your behalf. They will work with the IRS to stop the garnishment and reduce the amount you owe. They generally work on a payment plan between you and the IRS that will include monthly payments that are smaller than the amount that is taken from your monthly benefits. And, a tax advisor will also help with completing and submitting un-filed tax returns.
Daniel Stoica Accounting Professional