Garnished Wages
Garnished Wages
What you need to know for payroll purposes…
As you expand your business and take on new employees, you may come across a situation where you are required to garnish wages. Wage garnishment (levy) occurs when an employer is required to withhold the earnings of an individual for the payment of a debt in accordance with a court order or other legal procedure.
Title III of the Consumer Credit Protection Act (CCPA) permits a greater amount of an employee’s wages to be garnished for child support, bankruptcy, or federal or state tax payments. Title III allows up to 50% of an employee’s disposable earnings to be garnished for child support if the employee is supporting a current spouse or a child who is not the subject of the support order, and up to 60% if the employee is not doing so. An additional 5% may be garnished for support payments of 12 weeks in arrears.
An employee’s disposable earnings is defined as the amount of earnings left after legally required deductions and expenses—federal, state and local taxes, social security, unemployment insurance and state employee retirement systems contributions—have been made. Deductions and expenses not required by law, such as union dues, health and life insurance and charitable contributions, are not subtracted from gross earnings when the amount of disposable earnings for garnishment purposes is calculated.
The IRS offers special payroll tax tables to help determine how much tax should be withheld.
