Still, there are a few situations where money can be taken from disability payments. As a member of the disability protected class facing such a situation, a tax professional or advisor can help you understand your rights, review any notices, and take the right steps to protect your income.
Have you received garnishment notices from the IRS? Contact our experienced team of tax specialists to review the notices and help you protect your social security benefits.
This article explains the meaning of Social Security Disability benefits, garnishment, and how to handle potential garnishment.
What Are Social Security Disability Benefits?
Social security disability benefits are a type of financial assistance that the Social Security Administration provides to people who cannot work because of a serious disability. The main purpose of these disability payments is to help cover basic needs like food, housing, and medical bills when someone has limited income and cannot earn money through work.
For many, social security disability income is their only source of money, and it provides the financial stability they need to survive. These federal benefits are part of the larger social security system, which is designed to protect workers and families in times of illness, disability, or retirement. There are two main kinds of social security disability benefits.
The first is called Social Security Disability Insurance (SSDI). People qualify for SSDI benefits if they have worked for a long time, paid federal taxes into the Social Security system during their years of work, and then, due to certain disabilities, are unable to work. The amount of SSDI payments depends on past earnings, and after two years of receiving them, most people also qualify for Medicare.
The other program is the Supplemental Security Income (SSI). SSI benefits are for people who have very limited income and resources, even if they have not worked or paid into Social Security. These SSI payments come from the federal government through general tax funds, not payroll taxes, and they often provide access to Medicare. In summary, security disability insurance (SSDI) is work-based, while supplemental security income (SSI) is need-based.
What Does Garnishment Mean?
Garnishment is when a court order or a federal agency allows money to be taken directly from a person’s income or bank account to pay off certain debts. In simple terms, it means part of your wages, federal benefits, or other payments can be withheld before you receive them. This process is used by creditors or the federal government to collect unpaid debts.
The garnishment of wages and the garnishment of social security disability benefits are not the same. Wage garnishment happens when an employer is required to withhold part of a worker’s paycheck and send it directly to a debt collector or agency. On the contrary, garnishment of SSDI benefits or SSI benefits is limited by federal regulations.
When Can Social Security Disability Benefits Be Garnished?
In most cases, social security disability benefits are protected from creditors under federal law. The main protection comes from 42 U.S.C. §407, which affirms that security disability benefits cannot be taken or assigned to pay most debts.
However, there are a few important exceptions where SSDI benefits can be garnished. One of the biggest exceptions is when a person owes federal taxes or back taxes. Under Section 1024 of the Taxpayer Relief Act of 1997 (Public Law 105-30), the IRS has the power to take a portion, usually 15%, of disability payments to offset these debts.
Another exception involves unpaid child support or spousal support as stated in Section 459 of the Social Security Act (42 U.S.C. 659). These family obligations are usually treated as a priority in court and could result in a court order requiring part of an individual’s SSDI payments to go directly towards these responsibilities.
A third exception applies to certain federal debts, such as unpaid federal student loans or overpayments made by federal agencies like the Social Security Administration or even the Federal Emergency Management Agency (FEMA) after a disaster. Whenever any of these exceptions applies, garnishment is usually enforced through a legal or administrative process.
For a tax debt, the IRS does not need a court ruling; it can issue a notice and take money directly from the social security benefits. For child support and alimony, a court order instructs the Social Security Administration to withhold part of a person’s Social Security disability insurance each month.
For other government debts, such as student loans or federal overpayments, the federal agency involved can order the garnishment and reduce the monthly benefits. In all of these cases, the garnished amount is sent directly to the creditor or federal agency instead of the disabled person’s bank account, leaving only the remaining portion available for direct deposit.
When Can SSD Benefits Not Be Garnished?
There are many times when social security disability benefits cannot be garnished. Under the law, security disability benefits are safe from private creditors, debt collectors, and most collection agencies. That means that if you owe credit card debt, medical bills, or other private loans, your disability payments cannot legally be taken.
Also, while SSDI benefits can sometimes be garnished for child support, spousal support, federal student loans, or federal taxes, the law makes sure people still have enough to cover basic needs. A protected amount is always kept safe, at least $750 each month, or $9,000 a year, cannot be taken. There is also a hardship provision, which means that if the loss of benefits would cause serious financial trouble, you can ask to lower the garnishment or pause it.
Finally, you have appeal rights. If you think the garnishment is unfair or wrong, you can request a hearing with an administrative law judge and fight the decision. These rules are in place to keep social security disability insurance from leaving people with no income to live on. Knowing your rights is important to avoid losing access to the money you need for daily living.
How to Handle Potential Garnishment
If you get a notice of garnishment, it’s important to act quickly and wisely. The right steps can help you keep the money you need for daily living and protect your Social Security disability benefits. Here are a few steps to take when faced with potential garnishment:
- Review the Garnishment Notice Carefully: If you receive a garnishment notice, it is important that you read it closely. Check who sent it, how much is required, and the reason for the garnishment. Make sure it is legitimate and not a mistake.
- Verify Whether the SSD Benefits Are Protected: Most Social Security Disability (SSD) benefits are protected under federal law. As stated earlier, only certain debts, such as federal taxes, child support, or federal student loans, can legally be taken. Always confirm whether the garnishment falls into one of these exceptions.
- Contact the Creditor or Agency: Reach out to the creditor or the agency that issued the garnishment. Ask for clarification on why they are attempting to garnish your benefits. If your income is protected, provide documentation showing that your benefits are exempt.
- File a Claim of Exemption: If the garnishment is improper, you can file a claim of exemption. This includes asking a court or agency to recognize that your SSD income cannot be garnished. You will need to submit the required forms along with proof of your protected income.
- Keep Detailed Records: Save every notice, letter, and piece of communication with creditors, banks, or courts. Having clear documentation is important if you need to challenge the garnishment or take legal action later.
- Seek Legal Assistance: If you are unsure of your rights or if your SSD benefits are being taken unfairly, speak with a qualified attorney. A tax attorney can help protect your benefits, stop improper garnishment, and ensure that federal regulations are being followed. Getting professional guidance is often the best way to secure your financial stability.
- Monitor Your Bank Accounts: Monitor your accounts to ensure no unauthorized deductions are made from your SSD deposits. If you notice an improper deduction, report it immediately and take action before the problem grows.
Tips for Protecting Your SSD Benefits
First of all, ensure that you keep good records of your income and disability benefits. Save bank statements, deposit slips, and any letters you get from the Social Security Administration. These papers can prove your money is protected.
Read every letter or notice you get from creditors or agencies. Make sure you understand who the notice came from and why they intend to garnish your SSD benefits. If someone attempts to unfairly seize your benefits, consult an attorney. A lawyer can explain your rights and help you fight improper garnishment so you do not lose the benefits you need to live on.
Need Help Protecting Your SSD Benefits?
Facing a notice that your Social Security Disability (SSD) benefits might be garnished can feel stressful and confusing. The good news is that federal law gives strong protections, and in most cases, your benefits cannot be touched.
However, when debts such as child support, federal taxes, or student loans are involved, garnishment may still occur. In these situations, seeking valuable guidance from a qualified tax professional or attorney can help protect your rights and make sure your benefits remain secure.
Victory Tax Lawyers is a trusted firm with over 10 years of experience helping people protect their income and resolve tax-related issues. Contact us now or visit any of our offices if you are facing any garnishment problems.
FAQ
Below are answers to some of the common questions people are asking about the garnishment of Social Security Disability.
Can SS Disability Benefits Be Garnished for Credit Card Debt?
No. Social Security disability benefits cannot be taken by credit card companies or private debt collectors. Federal law protects your income from these kinds of debts.
Can SSI Benefits Be Garnished for Any Debts?
Generally, SSI benefits cannot be garnished at all. They are meant to cover basic needs for people with very limited income, so even the government cannot take them for taxes, student loans, or other federal debts.
How Much of My SSD Benefits Can Be Garnished for Child Support?
If you owe child support or spousal support, part of your SSDI benefits can be withheld. The amount depends on the court order, but can be as much as 50–65% of your monthly payments.
What Should I Do if a Creditor Tries to Garnish My SSD Benefits?
If a creditor or debt collector tries to take your benefits when they are protected, do not ignore it. Keep copies of all notices, show proof that your income comes from Social Security, and if needed, ask a qualified attorney for help. This can stop unlawful garnishment and protect the money you rely on.
