Income-Withholding
Income-Withholding Order/Notice
Income withholding is the court- or administratively-ordered deduction of a specified amount from a parent's income for payment of child support. All Federal agencies must honor an income-withholding order/notice for child support from any state. Out-of-state income-withholding orders/notices are valid throughout the country including U.S. territories. All states are required to use a standardized withholding form entitled Order/Notice to Withhold Income for Child Support (OMB No. 0970-0154).
A child support income-withholding order/notice must be paid before all other garnishments, with one exception. The only withholding that takes precedence over child support is a Federal (IRS) tax levy entered prior to when the underlying child support order was established. It is the date that the child support order is established, and not the date the withholding order/notice is served on the Federal agency, that determines precedence.
Income is defined as any periodic form of payment due to an individual, regardless of source,
including wages and salaries, commissions, bonuses, workers' compensation, disability, payments pursuant to a pension
or retirement program, and interest.
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Not only must child support be paid first, a higher percentage of the employee's disposable income can be withheld for child support than for other garnishments. The Federal agency deducts the specified amount of child support each pay period and sends it to the state child support enforcement (CSE) agency's State Disbursement Unit (SDU), which then forwards the payment to the custodial parent. In private cases (not enforced by the CSE agency) in which the support order was initially issued on or after January 1, 1994, the Federal agency must also forward the payment to the SDU. Some states require that all child support payments be sent to the SDU, regardless of date. The income-withholding order specifies where the payment should be sent.
Child support is withheld from an employee's regular pay, but it can also be withheld from income other than a paycheck. For Federal employees, this is the list of Federal benefits from which child support can be deducted:
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Per OPM regulations (5 CFR 581), cash awards, including performance-based cash awards, are considered income, as is any payment for accrued leave.
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- Periodic benefits
- pensions
- retirement benefits
- retired/retainer pay
- annuities
- dependents' or survivors' benefits when payable to the obligor
- refunds of retirement contributions where an application has been filed
- amounts received under any Federal program for compensation for work injuries
- benefits received under the Longshoremen's and Harbor Workers' Compensation Act
- compensation for death under any Federal program, including death gratuities
- benefits from the Social Security Administration (but not SSI benefits); Veterans Affairs (in certain instances); Railroad Retirement Board; and Black Lung.
For more details, please refer to the OPM regulations on processing garnishment orders for child support and/or alimony in Title 5 of the Code of Federal Regulations.
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Processing the Order/Notice
Upon receipt of the Order/Notice to Withhold Income for Child Support, the agency should:
- Document the date and time of receipt.
- Determine if the order is "regular on its face" (that is, it appears to be an authentic and complete legal document).
- Send a copy of the Order/Notice to the employee within 15 calendar days from the date of receipt.
- Follow the terms of the order.
Although Federal agency employers follow Federal law for New Hire Reporting, Federal law directs Federal agencies to follow state law for income withholding.
The law of the issuing state governs:
- Duration and amount of child support, current and arrears;
- Medical support terms;
- Where to remit payments; and
- Payment of fees and costs charged (if any) by the child support enforcement (CSE) agency, issuing court or custodial party's attorney.
The law of the employee's official duty station state (or "principal place of employment") governs:
- When to begin withholding (if longer than 30 calendar days);
- When to remit payments (this can be from 1 to 7 days after payday);
- Maximum amount to be withheld (within Consumer Credit Protection Act limits);
- How to allocate withholding across multiple child support orders;
- Administrative fee that the Federal agency is permitted to charge the employee; and
- Other terms and conditions that may be set by state law.
The State Income Withholding Information (available in HTML | PDF)
Only the employee has the right to dispute the terms of a child support income-withholding order and can do so by contacting the issuing agency or tribunal. The Federal agency cannot contest the income-withholding order; however, the Federal agency should contact the issuing CSE agency if unable to implement the withholding order either because the individual named in the order is not an employee or a withholding is already in place for the child.
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Withholding Examples
Allowable Disposable Income
- Biweekly gross pay is $760.
- Biweekly child support due is $295.
- Mandatory deductions total $201.
- Employee is single and does not owe back child support.
Note the following differences between net pay and disposable income in this example. The amount of disposable income, $559, is used to determine child support withholding limits, rather than the net pay, $469.
Gross Pay
Federal income tax
FICA
Medicare
Health insurance
Union dues
Thrift Savings Plan
Union pension
Credit union car loan
Disposable Income:
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$760.00
(95.00)
(45.00)
(11.00)
(25.00)
(25.00)
$559.00
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$760.00
(95.00)
(45.00)
(11.00)
(25.00)
(10.00)
(25.00)
(30.00)
(50.00)
Net Pay: $469.00
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- Gross pay - mandatory deductions = disposable income:
$760 - $201 = $559
- Disposable income x CCPA % limit = allowable disposable income:
$559 x 60% = $335.40
Note that 60% is the applicable CCPA limit because the employee is not supporting a second family and does not owe any past due child support.
Allowable disposable income is the maximum available for child support withholding.
Allowable disposable income (from above) is $335.40.
- $335.40 > $295.00, so the full $295 is withheld for child support.
If you take the same example but increase the biweekly child support payment to $400, you cannot withhold the full amount due. By law, you can only withhold a maximum of $335.40. This means that the employee will fall behind by $64.60, and will be in arrears. Some states charge interest on the overdue amounts. The employee has the option of paying the underpaid amount directly to the issuing agency if he or she does not want to fall into arrears.
Imputed Income
Imputed income is considered a fringe benefit provided to employees that must be counted as additional income subject to taxation, but not counted as additional income for calculation of allowable disposable income for child support purposes. Examples of imputed income are employer-paid parking garage fees that exceed the Federal allowance and non-qualified tuition reimbursement.
In calculating child support, imputed income must be subtracted from the disposable income before determining the obligated employee’s allowable disposable income.
Wages
Add imputed income of parking fees
Taxable earnings
Deduct mandatory deductions
Subtract imputed income
Disposable earnings
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$1,000
100
$1,100
(350)
(100)
$650
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The CCPA limit would then be applied to the disposable earnings of $650, rather than the amount of $750 ($1,100 - $350 = $750), which represents taxable earnings less mandatory deductions.
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Special Situations
Multiple Income-Withholding Orders - Same Employee and Same Child
There should not be more than one withholding order for a child. The issuing CSE agency, not the Federal agency, is responsible for resolving the duplication. The Federal agency receiving a duplicate withholding order should follow these steps:
- Continue to honor the first order received.
- Give your employee a copy of the second order.
- Contact the issuing agency that sent the second withholding order and inform it that you are already sending withheld payments for the same child to another jurisdiction. Provide payment information such as the amount of the withholding and where the withholding is being sent.
- Contact the issuing agency that sent the first withholding order and inform it of the second order.
Multiple Income-Withholding Orders - Same Employee and Different Children
Federal regulations require that some money must be paid to each order for current support if there is more than one withholding order (for different children of the same employee). In addition, states have enacted laws specifying the method for allocating money toward current support due for each order. The orders should not be paid on a "first come, first served" basis.
For more information, see Statutory & Regulatory Authority for Federal Agencies' Withholding Allocation.
Not Enough Money to Withhold Full Ordered Amount
If there is enough allowable disposable income to pay multiple orders, the Federal agency should pay the full amount of current support due for each order.
Sometimes an employee’s earnings do not stretch far enough to pay all his or her claimants. If there is not enough allowable disposable income to pay multiple orders, the allocation method of the employee’s official duty station state (principal place of employment) must be followed to determine how much to pay to each order. States use one of two methods to allocate withheld payments among multiple withholding orders:
- Prorate by allocating a percentage to each order based on the total dollar amount of current support ordered, OR
- Share equally by dividing the allowable disposable income by the total number of orders.
The prorata method is used by 49 states/territories; the equal method is used by 6 states/territories. See the State Income Withholding Information matrix for more information.
Example:
- Order A current support owed: $220/biweekly
Arrears owed: $50/biweekly
- Order B current support owed: $200/biweekly
- Order C current support owed: $185/biweekly
- Employee's disposable income: $1000/biweekly
- Assume allowable disposable income is $550.
Because the employee is supporting more than one family and is in arrears, the CCPA limit is 55% x disposable income (55% x $1000 = $550).
Withholding:
- Total current support owed: $605/biweekly
- Total arrears owed: $50/biweekly
- There is not enough allowable disposable income ($550) to withhold the entire amount of current support due for all these orders ($605). Nothing can be withheld to satisfy the arrearage.
Allocation Methods:
Most states use one of two methods to allocate withheld payments among multiple withholding orders:
Method 1: Allocate a percentage to each order based on the total dollar amount of current support orders.
Method 2: Divide the allowable disposable income by the total number of orders.
Allowable disposable income (maximum that may be withheld): $550
3 orders for the same employee (Orders A, B and C)
Dividing by 3 (the total number of orders) would yield $183.33 to be applied to each order.
550 ÷ 3 = $183.33 paid to each order
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IRS Tax Levy and Child Support
An IRS tax levy takes precedence over a child support withholding order only if the tax levy was entered before the child support order was established. The priority determination between a child support withholding order and an IRS tax levy depends on the date that the original child support order was established (as opposed to when the income-withholding order/notice was received).
The Federal agency usually is not informed of the original order date. Therefore, the following action is recommended:
- If a Federal tax levy is received for an employee who already has a child support withholding order in place, the child support withholding order takes precedence if the original child support order pre-dates the Federal tax levy. Contact the IRS and tell them a child support withholding order is already being honored.
- If a child support withholding order is received for an employee who already has a Federal tax levy in place, and the original child support order was established after the Federal tax levy, the Federal tax levy takes precedence. Contact the issuing CSE agency about this situation. The CSE agency may then contact the IRS to discuss an alternate payment plan.
A Federal tax levy is the only deduction that would take precedence over child support if the original child support order was established after the Federal tax levy. If there is any question on how to proceed, contact the CSE agency.
Remember that child support should always be withheld before the following voluntary and involuntary deductions:
- Assignment of wages
- State and local tax levies
- Creditor garnishment.
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Other Garnishments and Child Support
Guidelines: A child support income-withholding order must be paid before all other garnishments. When you have a child support income-withholding order and a commercial garnishment for your employee:
- Deduct the child support withholding.
- To determine how much can be paid to the commercial garnishment, take the lesser amount of:
- The difference between the biweekly disposable income (before the child support withholding) and 60 times the minimum wage [60 x $5.15 = $309.00]. Note that you would calculate 30 times the minimum wage for weekly disposable income.
- if the biweekly disposable income is less than $309 (or the weekly income is less than $154.50), no withholding for the commercial garnishment may be made.
- 25% of the biweekly disposable income.
- For the commercial garnishment, you may withhold the amount above the child support deduction up to the lesser amount figured in step (2) above.
Example A: Tony’s child support withholding obligation is $90.00/week (or $180 every biweekly pay period). His biweekly disposable income is $700. Sears serves a garnishment against Tony for a $1,000 debt.
- Deduct $180 for child support from Tony’s $700 pay (Tony is single and is not in arrears, so up to 60%, or $420, may be withheld for child support.)
- Take the lesser of:
- Disposable income minus 60 times minimum wage [60 x $5.15-$309.00]:
$700 – $309.00 = $391.00
- 25% of disposable income: 25% x $700 = $175
$175 is the lesser of these two amounts.
- Difference between allowed amount for a commercial garnishment and the child support deduction taken:
$175 - $180 = -$5
The child support deduction of $180 has already exceeded the allowed amount for a commercial garnishment; therefore nothing can be withheld for Tony’s Sears garnishment.
Example B: Tony’s child support withholding obligation is $70/week (or $140 every biweekly pay period). His biweekly disposable income is $1,000. Sears serves a garnishment against Tony for a $1,000 debt.
- Deduct $140 for child support from Tony’s $1,000 pay (Tony is single and is not in arrears, so up to 60%, or $600, may be withheld for child support.)
- Take the lesser of:
- Disposable income minus 60 times minimum wage [60 x $5.15-$309.00]:
$1000 – $309.00 = $691.00
- 25% of disposable income: 25% x $1000 = $250
$250 is the lesser of these two amounts.
- Difference between allowed amount for a commercial garnishment and the child support deduction taken:
$250 - $140 = $110
$110 can be withheld for Tony’s Sears garnishment.
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Bankruptcy and Child Support
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It is a good idea for the Federal agency to notify the child support agency that a bankruptcy order has been received and simultaneously, to notify the bankruptcy court that child support order is in force. Always follow the payment instructions from the bankruptcy court.
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Even if an employee declares bankruptcy, he is still obligated to pay child support. Debts due for delinquent child support are not dischargeable in bankruptcy actions.
Several changes to the Bankruptcy law went into effect on October 17, 2005. One of the most significant changes related to child support is that the automatic stay provisions under the bankruptcy code no longer apply to the withholding of domestic support obligations from a noncustodial parent’s income or wages. This provision means that it is not necessary to ask the court to provide relief from the stay for purposes of withholding the noncustodial parent’s support obligation. Income withholding orders must be implemented immediately, and those income withholding orders already in place should continue without interruption.
If an employer receives information or notification regarding a bankruptcy filing for an employee, the employer should continue withholding amounts for domestic support obligations. A "domestic support obligation" is defined as a debt or an amount that is in the nature of alimony, maintenance or support, even if not expressly designated as such. Arrears are included in this definition.
A domestic support obligation includes amounts that are owed to:
- a spouse,
- former spouse,
- child,
- parent of a child,
- legal guardian of a child,
- responsible relative of a child, or
- a governmental unit.
If there is any doubt about whether a withholding order is a domestic support obligation, please contact the agency, court or entity who issued the withholding order.
A Federal agency may be notified, however, that it is no longer responsible for withholding the payments because a trustee of the bankruptcy court has taken over this task. Withholding should continue until official notification from the child support enforcement agency or bankruptcy court has been received.
