How to Garnish Wages From Your Payroll
An employer that receives a wage garnishment from the court or a legal entity, such as the Internal Revenue Service or U.S. Department of Education, must honor it. Wage garnishments may include those initiated by creditors or income withholding for child support or alimony. The document mandates you to withhold a certain portion of the employee’s wages to satisfy a debt. Follow legal procedures when making deductions for wage garnishments.
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Instructions
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Determine disposable wages by subtracting legally required deductions from the employee’s gross pay. Legally required deductions include federal and applicable state taxes, plus other deductions that the state may require, such as workers’ compensation insurance, state employee retirement contributions and unemployment tax.
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Check the garnishment paperwork for the deduction calculation and subtract the required amount from the employee’s disposable income. For example, the paperwork says to garnish 15 percent of disposable income and the employee’s weekly disposable income is $300. Her weekly garnishment amount is $45.
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Learn garnishment limits to ensure proper withholding. Federal law restricts the amount that you can withhold from an employee’s disposable pay to the lesser 25 percent of disposable earnings or the total by which the disposable pay is more than 30 times the federal minimum hourly wage. Withhold no more than 50 to 60 percent of disposable pay for child support or alimony.
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Apply state law if it has a lower limit or provides more benefits to the employee. For example, if an employee works in Florida and claims head of household as his filing status, $750 of his weekly disposable pay is exempt from garnishment, unless he agrees to the garnishment in writing.
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Consult Publication 1494 to calculate an IRS wage garnishment or levy. To determine the amount of pay that is exempt from the levy, apply the publication table that matches the employee’s pay period, filing status and number of exemption she claims on her Statement of Exemptions and Filing Status. The statement is included in the levy notice that the IRS sends you. Give the employee the statement to complete and submit within three business days.
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Deduct ordinary wage garnishments in the order received. You may withhold multiple garnishments at once, provided the total does not exceed federal or state limit. IRS tax levies and child support take precedence over all other wage garnishments. Child support takes priority over a levy if the support establishment date comes before the date that the levy was implemented.
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Make the deduction during the time frame that the issuing agency mandates, such as on the pay period that follows the date you received the order.
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Tips & Warnings
Check the garnishment document for additional tasks that you may be required to execute, such as filing an answer stating that you hold wages for the employee, his pay frequency and the amount that will be submitted.
Submit garnishment payments promptly to the party listed on the paperwork.
Keep withholding the garnishment until the employee pays off the debt or until the issuing agency says to stop.
The state may allow you to deduct a small administrative fee from the employees’ wages to compensate for administering the garnishment.
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