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Video: IRS 1099 Levy Contractor Options

Updated for Tax Year 2014


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.

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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.

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