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Whether or not your SS benefits are taxable depends on the total earnings you make for the year. If your adjusted gross income is over approximately $32,000 per year then you have to pay taxes on your benefits. Workers compensation
benefits are not considered earned income and thus not taxable in CA or by the IRS.
If they have made a mistake in the "trivial back taxes" they claim you owe, then you need to first dispute the amounts due. Once you dispute the amounts due and get the proper adjustment made, you need to just hold off on them and keep calling them to push them for an offer in compromise to settle the amount due with them. They will eventually relent, especially if you continue to call and keep your cool and negotiate with them about the extreme financial hardship and your disability.
You need to continue negotiating with them, which will hold them off from trying to garnish (since for back taxes or government debt they can garnish SSDI and SSI) and work on them for the compromise.
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