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 employers 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 Income Withholding for Support (OMB-0970-0154) [71 KB DOC].
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 employer, 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, but a higher percentage of the employee's disposable income can be withheld
for child support. The employer deducts the specified amount of child support each pay period and sends it to the
State Disbursement Unit (SDU), which then forwards the payment to the custodial parent. In private cases (not enforced by the child support
agency) in which the support order was initially issued on or after January 1, 1994, the employer must forward the payment to
the SDU. Some states require that all child support payments be sent to the SDU, regardless of date.
To learn more, select a topic below.
Processing the Notice
Upon receipt of the Order/Notice to Withhold Income for Child Support, the employer should:
- Document the date of receipt.
- Determine if the order is "regular on its face" (that is, it appears to be an authentic and complete legal document).
- Give a copy of the Order/Notice to the employee if it has been issued by another state.
- Follow the terms of the order.
Only the employee has the right to dispute the terms of a child support income-withholding order and should do so
by contacting the issuing agency or tribunal. The employer cannot contest the income-withholding order; however,
the employer should contact the issuing agency if unable to implement the withholding either because the individual
named in the order is not an employee or a withholding is already in place for the child and employee.
Follow the law of the issuing state regarding:
- 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 agency, issuing court, or custodial party's
attorney.
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State law provides for fines against an employer who discharges from employment, refuses to hire, or takes disciplinary
action against an employee in response to withholding.
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Follow the law of the employee's principal place of employment regarding:
- When to begin withholding,
- When to remit payments (this can be from 1 to 7 days after payday),
- Mandatory deductions,
- Maximum amount to be withheld (within Consumer Credit Protection Act limits),
- How to allocate withholding across multiple child support orders,
- Administrative fee that employer is permitted to charge, and
- Other terms and conditions that may be set by state law.
State Income-Withholding Information (also available in PDF)
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Withholding Calculations
There are two basic steps to determine how much to withhold for child support from an employee's income: calculating disposable income and calculating allowable disposable income.
- Disposable Income = gross pay - mandatory deductions.
- Disposable income is the amount of earnings remaining after subtracting certain mandatory deductions from an employee's gross pay.
- Mandatory deductions include federal, state and local taxes; unemployment insurance; workers' compensation insurance; state employee retirement deductions; other deductions determined by state law.
- Note that disposable income is not necessarily the same as net pay. An employee may have a deduction taken from his pay that is not mandatory, such as union dues or a car loan payment.
- Allowable Disposable Income = disposable income x CCPA % limit
- Allowable disposable income is the maximum available for child support withholding. In most cases, the amount ordered to be
withheld will be less than the allowable disposable income amount, and the ordered amount can be withheld without any problem.
Even if the withholding order specifies a higher payment, the allowable disposable income is the most that may be withheld.
- The Federal Consumer Credit Protection Act (CCPA) sets limits on withholding an employee-parent's disposable
income based on his/her current family situation and child support payment history. The CCPA protects the
employee from having an excessive amount withheld. (Some states have enacted laws that provide even more
protection to the employee-parent's income, although most states follow the Federal limits. See
State Income-Withholding Information.)
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Direct your questions regarding lump-sum or irregular payments to the child support enforcement agency or court that issued the original Order/Notice.
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- The withholding limits set by the Federal CCPA are as follows:
- 50% - Supports a second family, with no arrearage or less than 12 weeks in arrears
- 55% - Supports a second family, and more than 12 weeks in arrears
- 60% - Single, with no arrearage or less than 12 weeks in arrears
- 65% - Single, and is more than 12 weeks in arrears.
(A second family means there is a spouse and/or child for whom the employee has responsibility. "In arrears" means there is past due, unpaid support owed by the noncustodial parent.)
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Withholding Examples
Allowable Disposable Income
2 Steps to Calculate Child Support Withholding:
- Gross income - mandatory deductions = disposable income
- Disposable income x CCPA % limit = allowable disposable income
If allowable disposable income = ordered amount, then withhold ordered amount.
If allowable disposable income < ordered amount, see Special Situations-Not Enough Money below.
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- Weekly gross pay is $760.
- Weekly child support due is $295.
- Mandatory deductions total $151.
- Employee-parent is single and does not owe back child support.
The law of the state where the employee works (the "principal place of employment" state) determines which deductions are mandatory. In some states, the example below would change because health insurance and union dues, for example, are mandatory deductions.
Note the following differences between net pay and disposable income in this example. The amount of disposable income, $609, is used to determine child support withholding limits, rather than the net pay, $469.
Gross Pay
Federal income tax
FICA
Medicare
Health insurance (pre-tax)
Union dues
Savings bonds
Union pension
Credit union car loan
Disposable Income:
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$760.00
(95.00)
(45.00)
(11.00)
$609.00
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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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Never withhold more than the ordered amount, even if allowable disposable income is greater than the ordered amount.
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- Gross pay - mandatory deductions = disposable income:
$760 - $151 = $609
- Disposable income x CCPA % limit = allowable disposable income:
609 x 60% = 365.40
Note that 60% is the applicable CCPA limit because the employee-parent is not supporting a second family and does not
owe any back child support. Allowable disposable income is the maximum available for child support withholding. Allowable
disposable income (from Step 2 above) is $365.40.
- $365.40 > $295.00, so the full $295 is withheld for child support.
If you take the same example but increase the weekly child support payment to $400, you cannot withhold the full amount due. By law, you can only withhold a maximum of $365.40. This means that the employee will fall behind by $34.60, 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.
Pre-Tax Deduction
Pre-tax deductions (e.g., 401(k) plan contributions) are adjustments to earned income before taxes are deducted, thus reducing an employee's taxable earnings. Although the employee voluntarily elected to trade current disposable income for a deferred benefit, there is no reason to deny a portion of this income to his or her child.
In calculating disposable income for child support, pre-tax deductions must be added to the employee's taxable wages before determining the obligated employee's allowable disposable income.
Gross Pay
Deduct 401(k) contribution pre-tax deduction
Taxable earnings
Deduct mandatory deductions
Net pay
Add back pre-tax deduction
Disposable earnings:
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$1,000
(100)
$900
(250)
$650
100
$750
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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 disposable income for child support purposes.
In calculating disposable income for child support, imputed income must be subtracted from the employee's gross pay before determining the obligated employee's allowable disposable income.
Gross Pay
Add imputed income of take-home vehicle
Taxable earnings
Deduct mandatory deductions
Net pay
Subtract imputed income from net pay
Disposable earnings:
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$1,000
300
$1,300
(350)
$950
(300)
$650
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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 agencies, not the employer, are responsible for resolving the duplication. The employer 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 situation of the same employee). In addition, states have enacted laws specifying the method for allocating money toward current support due for each order. Thus, some money must be allocated toward all current support orders. The orders should not be paid on a "first come, first served" basis.
Not Enough Money to Withhold Full Ordered Amount
If there is enough allowable disposable income to pay multiple orders, the employer 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 obligations. If there is not enough allowable disposable income, the allocation method of the employee's principal state of employment must be followed to determine how much to pay to each order. Most 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.
Example:
- Order A current support owed: $ 90/month
Arrears owed: $ 15/month
- Order B current support owed: $ 75/month
- Order C current support owed: $ 62/month
- Employee's disposable income: $300/month
- Assume allowable disposable income is $180.
Withholding:
- Total current support owed: $227/month
- Total arrears owed: $ 15/month
- There is not enough allowable disposable income ($180) to withhold the entire amount of current support due for all these orders ($227). 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:
- Allocate a percentage to each order based on the total dollar amount of current support orders.
- Add total current support due on all withholding orders.
- Divide each order's current support due by the total of all orders to figure each order's percentage of total.
- Withhold the percentage of allowable disposable income for each order.
Order A
Order B
Order C
Total
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$90.00 ÷ 227 = 39.65%
$75.00 ÷ 227 = 33.04%
$62.00 ÷ 227 = 27.31%
$227.00
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Allowable disposable income (maximum that may be withheld): $180
Order A
Order B
Order C
Total withheld
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$180 x 39.65% = $71.37
$180 x 33.04% = $59.47
$180 x 27.31% = $49.16
$180.00
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- Divide the allowable disposable income by the total number of orders.
Allowable disposable income (maximum that may be withheld): $180
3 orders for the same employee (Orders A, B and C)
180 ÷ 3 = $60 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 (as opposed to the income-withholding order/notice) was established.
The employer usually is not informed of the original order date. Therefore, the following action is recommended:
- If a child support withholding order is received for an employee who already has a Federal tax levy in place, contact the issuing child support agency about this situation. The child support agency can then contact the IRS to discuss an alternate payment plan.
- If a Federal tax levy is received for an employee who already has a child support withholding order in place, contact the IRS and tell them a withholding order is already being honored. The IRS may then elect to contact the issuing child support agency.
A Federal tax levy is the only deduction that would take precedence over child support. Remember that child support should always be withheld before the following voluntary and involuntary deductions:
- Assignment of wages
- Non-tax Federal debt
- 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 garnishment for your employee:
- Deduct the child support withholding.
- Determine the lesser amount of:
- The difference between the weekly disposable income (before the child support withholding) and 30 times the minimum wage [30 x $5.15 = $154.50]
- if the income is paid biweekly, multiply the minimum wage times 60 [60 x $5.15 = $309].
- if the biweekly disposable income is less than $309 or the weekly income is less than $154.50, no withholding for garnishment may be made.
- 25% of the weekly disposable income.
- For the garnishment, you may withhold the amount remaining after the child support deduction up to the lesser amount figured in step (2) above.
Example A: Tony's child support withholding obligation is $180.00/week. His weekly 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.)
- Determine the lesser of:
- Disposable income minus 30 times minimum wage:
$700 - $154.50 = $545.50
- b. 25% of disposable income: 25% x $700 = $175
$175 is the lesser of these two amounts.
- Difference between allowed amount for garnishment and the child support deduction taken:
$175 - $180 = -$5
The child support deduction of $180 has already exceeded the allowed amount for garnishment; therefore nothing may be withheld for Tony's Sears garnishment.
Example B: Tony's child support withholding obligation is $140/week. His weekly 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.)
- Determine the lesser of:
- Disposable income minus 30 times minimum wage:
$1000 - $154.50 = $845.50
- b. 25% of disposable income: 25% x $1000 = $250
$250 is the lesser of these two amounts.
- Difference between allowed amount for 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 employer to notify the child support agency that a bankruptcy order has been received and simultaneously, to notify the bankruptcy court that a 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.
An employer 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 agency or bankruptcy court has been received.
