How Does Wage Garnishment Affect Your Tax Return

If your wages are garnished in order to pay your debts, the amount that is garnished is considered received by you for federal income tax purposes. … The result is that you’ll be taxed on income that you never physically received – it’s considered constructively received and thus, fully taxable.

Will the IRS take my refund if my wages are being garnished?

If you owe taxes and failed to pay them within the past 10 years, the IRS will collect the debt by garnishing your wages, levying your bank account and intercepting your tax refunds. The law does not require the IRS to obtain a judgment order against you before garnishing your wages or seizing your tax refund.

Do wage garnishments show up on w2?

You do not have to include garnishments in an employee’s Form W-2 for the year. However, some employers choose to do so in box 14 (“other”) of Form W-2.