Q Can My Wages Be Garnished if I’m a Contractor or Freelancer?
If you're a contractor or freelancer, you generally have no taxes withheld through your paycheck. You can also work for several employers sporadically or at the same time. However, each employer who you do business with should file a form 1099 form with the IRS, keeping a tax record of how much money you've made and the company who hired you.
Because of this relatively complicated pay system, the process of freelancer or contractor wage garnishment can be difficult.
Typical wage garnishment involves your employer being contacted and requested to withhold a certain amount of money that they pay directly to the government, creditors, or other party to whom debt is owed. But employers who file 1099 forms for workers are not obligated to withhold wages from a paycheck.
However, this doesn't protect a contractor or freelancer from paying their debts, as there are other means of collection available.
Usually instead of wage garnishment, creditors will levy the contractor or freelancer’s accounts receivable or bank account. This means your bank account will be frozen and potentially some, or all, of the money in the account will be seized to pay the debt owed.
Levies are a method most often used by the IRS, but creditors can also petition the court to impose bank levies to recoup debts. If you have any questions about wage garnishment or bank levies, you should talk to a bankruptcy attorney who can help you unfreeze your accounts and figure out your options.
Castle Law Office has been handling bankruptcies for Kansas City clients from more than 14 years. If you need the fresh start bankruptcy can provide, call us today at 816-842-6200 to speak with an attorney. Or click here to email us and schedule your free consultation.