TurboTax / Tax Calculators & Tips / All Tax Guides / Self-Employment Taxes / Video: IRS 1099 Levy Contractor Options

Video: IRS 1099 Levy Contractor Options

Updated for Tax Year 2015


OVERVIEW

The IRS may perform a levy on a 1099 contractor to collect back taxes owed from the previous year. Find out about IRS 1099 levy contractor options with help from TurboTax in this video.


Hello, I'm Sarah from TurboTax with important news on how you can avoid an IRS garnishment on your 1099 earnings. Do you still owe taxes to the IRS from a prior tax year? If so, you should be aware that the agency has a power to collect it from your earnings.

If you are an independent contractor, it may take longer for the IRS to find you, but this does not mean you aren't on its radar. The IRS can garnish your earnings just as easily as it can with any employee. However, the IRS can only take what is owed to you at the moment your earnings are garnished. So, if you have not been paid yet for a two-week assignment, that money is safe from the IRS.

Unfortunately, the IRS can issue a series of levies to repeatedly collect from all of your 1099 payments. Remember though, the IRS is not looking to bankrupt you or ruin your career. Your best bet to avoid levies is to voluntarily contact them and try to negotiate a payment plan.

In addition to payment plans, you can appeal the garnishments or make an offer and compromise to reduce your taxes. If you do, contact the Taxpayer Advocate Service to help you.

Business and personal taxes in one

Just answer simple questions about your business and life, and TurboTax Home & Business takes care of the rest.

For only $104.99*
Start for Free

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


Security is built into everything we do
Here's how
* Important Offer Details and Disclosures
  • Filing Deadline: IRS filing deadline for tax year 2015 is April 18, 2016 (except for residents of Massachusetts or Maine, where the IRS filing deadline for tax year 2015 is April 19, 2016).
  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Free 1040EZ/A + Free State offer only available with TurboTax Federal Free Edition; Offer may change or end at any time without notice. Actual prices are determined at the time of print or e-file and are subject to change without notice. Savings and price comparisons based on anticipated price increase expected 3/18/16. Special discount offers may not be valid for mobile in-app purchases.
  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for efiling state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase expected 3/18/16. Prices subject to change without notice.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with efile and direct deposit; tax refund timeframes will vary.
  • Pay for TurboTax out of your federal refund: A $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. This benefit is available with TurboTax Federal products except the TurboTax Home & Business/QuickBooks Self-Employed bundle offers.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • About our credentialed tax experts: Live tax advice service is available via phone for your toughest tax questions; fees may apply. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Not available for TurboTax Business customers.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2014 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.