When can the IRS start garnishing wages if I owe taxes and what happens if I don’t file for a year?

Lexi, Chatbot

I understand that dealing with potential wage garnishment can be stressful. Have you already received any notices from the IRS regarding your tax balance?

Lexi, Chatbot

How much do you currently owe to the IRS, and have you made any attempts to set up a payment plan?

Lexi, Chatbot

Is there anything else the lawyer should know before I connect you? Rest assured they'll be able to help with your tax balance owed.

Joel Salas, EA

Hello! Thank you for your question. My name is Joel, and I am an expert with over 16 years of experience. I am reviewing your question now and will be with you shortly.

In the meantime, feel free to provide any other relevant details:

• What specific concerns do you have about not filing taxes for a year?
• Have you considered the potential consequences of not filing your taxes, such as penalties or interest?
• Are there any other financial obligations or debts that you are currently managing alongside your tax situation?

Joel Salas, EA

Let’s break this down clearly.

If you don’t file your 2025 tax return by the due date, typically April 15, 2026, the IRS will impose a failure-to-file penalty. This penalty is 5% of the unpaid taxes for each month or part of a month the return is late, up to a maximum of 25%. For a $22,000 tax balance, this could mean up to $5,500 in penalties. (26 U.S.C. § 6651)

Additionally, a failure-to-pay penalty of 0.5% per month, up to 25%, applies to the unpaid tax amount, potentially adding another $5,500. Interest also accrues on the unpaid balance and penalties at the federal short-term rate plus 3%, compounded daily. As of now, the IRS underpayment rate is around 8% annually, meaning roughly $1,760 in interest per year on $22,000.  (26 USC § 6601)

These consequences begin immediately after the filing deadline if you owe taxes and don’t file or pay.

The IRS typically sends notices (like a CP59 notice) within a few months of the missed deadline, requesting the return. If you don’t respond, they may prepare a Substitute for Return (SFR) based on your W-2 and other income data, often within 6–12 months. This could lead to a higher tax bill, as the IRS won’t account for deductions or credits you might be eligible for.

Wage garnishment, if it occurs, typically starts 1–2 years after the missed filing, but only after multiple notices (e.g., CP501, CP503, CP504) and a final Notice of Intent to Levy, which gives you 30 days to act. Garnishment could withhold up to 15–25% of your disposable income, depending on exemptions. (26 U.S.C. § 6331(e))

Here’s what you can do to avoid or minimize these consequences:

1. File your 2025 tax return by April 15, 2026, even if you can’t pay the full $22,000. This avoids the failure-to-file penalty.
2. Request an IRS payment plan to spread out the $22,000 over time.
3. If you can’t file by the deadline, request an extension to October 15, 2026, using Form 4868.
4. Consult a tax professional to ensure all deductions and credits are claimed.

Not filing could also trigger audits or complicate future tax years. Addressing this proactively is the best way to limit penalties and avoid garnishment.

Joel Salas, EA

Does this clarify the consequences and timeline for you?

Joel Salas, EA

You’ve asked about the minimum installment amount for an IRS payment plan to manage your anticipated $22,000 tax balance for 2025.

The IRS doesn’t set a strict minimum installment amount. It depends on your financial situation and the type of plan. For a balance of $22,000, you’re likely eligible for a streamlined installment agreement (for balances under $50,000), which allows up to 72 months (6 years) to pay.

For example, if your total balance becomes about $25,000 with penalties and interest, a 72-month plan would be about $347 per month.

However, the IRS can adjust this based on your income and expenses. If you request a lower payment, you may need to submit financial information (Form 433-F), and the IRS will determine what you can afford.

Other key points:

• You can apply online on the IRS website.
• Setup fees range from $31–$225 depending on payment method.
• Interest and penalties continue until fully paid.
• You can modification the plan if your financial situation changes.