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Q. My husband is self-employed, and I work for a company. We file jointly, but the State of California garnishes my wages as we always owe money because my husband does not make quarterly payments. Is there anything I can do to make California take the money out of my husband’s earnings instead of mine?
You say that California (presumably the Franchise Tax Board, or FTB) garnishes your wages for your husband’s failure to pay quarterly payments. The FTB has the right to do that if it follows all due process. Nevertheless, you can negotiate with FTB collections to get them to garnish non-employee payments of your husband’s. For example, if your husband is a real estate agent who gets commissions, it may be possible to instruct the FTB to collect funds from his commission checks. I don’t think that’s wise, however. Wage garnishment is limited to a certain percentage of your wages (i.e., not all of your wages can be garnished), whereas the FTB can garnish 100 percent of your husband’s non-employee compensation. Also, it’s probably not wise to permit FTB to garnish non-employee (commission) checks, because it may put your husband or his business in a bad light with customers.
The bigger question is why there is a garnishment. The way to stop this is to increase withholdings from wages, make quarterly payments, or both. The garnishment likely triggers (avoidable) processing fees through the FTB. Also, if you don’t pay your taxes on time, you likely will incur penalties for failure to pay. If you file your individual tax returns on an extension request (i.e., don’t file by April 15 but get an extension and file before October 15), the FTB could charge penalties for failure to file on time. It could ignore your extension request and claim it is not valid because you failed to pay taxes by April 15. An extension to file is not an extension of time to pay taxes.
I urge you to consult your CPA or tax adviser to discuss these issues. Unfortunately, this question might reveal a bigger question about your financial planning and budgeting, which your CPA can help you with.
G. Scott Haislet, CPA, Esq., is a tax adviser, estate planner and real estate attorney. You can reach him at (925) 283-1031(925) 283-1031.
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