Summary: Child support withholding are the amounts that employers must deduct from employees before paying out their salary or wages to support children of the employee.
Child Support Withholding
As an employer, you occasionally have to get involved with your employees’ personal lives. While these instances can often be happy, like celebrating birthdays or granting leave for weddings, they may also be negative experiences. If you’re ever served with a child support withholding order, this unfortunately means you have to play a role in solving a problem in an employee’s life. However, this is a responsibility you’re required to carry out.
In this article, we’ll explain how child support withholding works, what your responsibilities are as an employer, and how to process orders when they come to you.
What is Child Support Withholding?
Child support withholding is a type of garnishment of a parent’s wages ordered by a court or child support agency to pay for child support. This means that a part of the parent’s earnings must be held by the employer and paid to the responsible state child support agency. Withholding is used to collect payments from a non-custodial parent to pay to the other parent who the child lives with to help that custodial parent cover the child’s financial needs. Child support may be due from fathers or mothers, may be collected for one or more children, and may be paid to one or more different state agencies.
Why Is Child Support Withholding Used?
According to the Attorney General of Texas, as much as 80% of child support payments are collected through wage withholding. While this may refer only to child support payments in arrears, this is still a very significant number, which explains the importance of child support withholding. The rationale, however, is simple.
Parents with custody of their children often struggle to provide care and financial resources for them and governments recognize that both parents should contribute to providing children with the resources they need. If a non-custodial parent doesn’t pay their share of this burden, a state child support agency or a court can order them to do so. If they still refuse to comply or if they’re late on payments and fall into arrears, a more drastic step can be taken – ordering the garnishment of their wages before they are even received by that parent. This is a way to side-step problems with delinquency and refusal to pay child support, as the parent whose wages are withheld has no choice in the matter.
Child Support Withholding Orders
If you are an employer working with enough employees for a long enough time, chances are high that you’ll receive an income withholding order (IWO) at some time. These orders or notices can direct you to withhold income from the payments you make to your employees as well as non-employees like independent contractors. They also give you both the legal right and the obligation to do so.
Withholding orders can be issued by courts, tribunals, attorneys, and individuals. However, most are issued by state, tribal, and territorial child support agencies. These orders should be accompanied by an Income Withholding for Support (IWO) form OMB0970-0154. This form (also used to order spousal support) will provide the following information:
- The sender’s information, including a remittance ID
- Employer and case information including the employee’s name and Social Security Number
- Order information, including the amounts to deduct per pay period of the employee’s wages due for child support, past-due child support, medical support, etc.
- Total amounts to withhold per pay period or as lump sums
- Remittance information, including when and to which agency you should remit payments
- Additional information including rules for withholding and employer liability
- Notification of employment termination or income status (to be filled out and returned by the employer if the parent is no longer or never was their employee or if the employer has stopped withholding income for whatever reason)
- Contact information for both the employer and employee if they have questions about the order
Employers should examine these orders carefully. If a form seems to have been altered or have errors on it, the employer is obligated to return it to the sender.
What Kinds of Income Can Child Support Be Withheld Form?
Child support is considered an after-tax withholding and is therefore applied to net pay and not gross pay. Income that can be withheld includes:
- Wages
- Salaries
- Bonuses
- Incentives
- Commissions
- Automatic gratuities
- Sick pay
- Vacation pay
- Worker’s compensation benefits
Worker’s compensation benefits are paid in place of wages and are therefore considered earnings. They can be subject to child support withholding if they’re paid from the insurer to an employee through their employer. Tips and gratuities paid directly to employees are generally not considered earnings that employers can withhold.
Child support can not be withheld before state and federal income taxes, Social Security tax (also known as Old-Age, Survivors, and Disability Insurance or OASDI), and Medicare tax, have been deducted from an employee’s pay. There are other important limitations to consider when deducting an employee’s income.
Limitations of Child Support Withholding
According to Title III of the Consumer Credit Protection Act (CCPA), wage garnishments have limits to protect employees from having their entire paychecks withheld and, therefore, having no income to support themselves. The CCPA limits wage garnishments for child support to:
- 50% of the worker’s disposable weekly income if the worker supports another child or spouse (increased to 55% if over 12 weeks in arrears)
- 60% if the worker does not support another child or spouse (increased to 65% if over 12 weeks in arrears)
Therefore, the most any employee’s income can be withheld is 65% if they’re single and their payments are over 12 weeks in arrears. Disposable income is defined as the worker’s income after deductions for income taxes, Social Security and Medicare taxes, and state unemployment insurance (SUI) contributions.
Some pre-tax deductions like contributions to 401(k) plans must be added back onto the employee’s disposable income. While this income is not taxed, it is still liable to be withheld for child support.
How Is Child Support Calculated?
It should be made clear that the employer is not obligated to calculate the amount of child support a parent owes or the amount that should be withheld from their pay. This is the responsibility of the court or Child Support Agency issuing the IWO for child support.
These courts and agencies must first correctly ascertain the parent’s earnings, however, which may involve contacting their employer. They need to find out the employee’s total earnings as well as their tax obligations and other deductions. Some states subtract costs like union dues and health and dental insurance provided for children from the employee’s disposable income before assessing their child support withholdings. They’ll also need to know the employee’s pay period or calculate the amount to be withheld based on all possible types of pay periods.
Let’s look at an example of how to determine child support payments:
Sample Calculation
A child support agency determines that Employee X, a single, non-custodial parent, must pay child support. It might calculate Employee X’s child support obligation as follows:
| Description | Amount |
|---|---|
| Gross monthly salary | $2,000.00 |
| Pre‑tax 401(k) contribution | –$150.00 |
| Federal income tax (12%) | –$222.00 |
| Social Security (6.2%) | –$114.70 |
| Medicare (1.45%) | –$26.83 |
| 401(k) contribution added back | +$150.00 |
| Total disposable income | $1,636.47 |
| Union dues deduction | –$50.00 |
| Income liable for child support withholding | $1,586.47 |
In a state that allows union dues to be deducted, Employee X’s net income liable for child support withholding would be $1,586.47. According to the CCPA, up to 60% of this income can be withheld or $951.88 per month. However, the child support agency may assess only a 20% withholding for this parent’s contribution.
At 20% of their income, Employee X would be deducted $317.29 for child support each month.
How To Process A Child Support Withholding Order
If you receive a child support withholding order (IWO) as an employer, you can follow these best practices for processing it:
- Check if the person on the order is your employee. If not, you must notify the sender.
- Ensure that a certified copy of the original order is included with the IWO if the IW wasn’t issued by a court or child support agency to check the IWO’s accuracy.
- Provide the employee with a copy of the IWO and inform them that you will withhold their income.
- Comply with the order, withholding the directed amount and remitting it to the appropriate receiver at every pay period until ordered to stop.
Child Support Withholding Summarized
Child support withholding is when a court or child support agency orders an employer to withhold part of an employee’s pay to be used for child support. As an employer, you must comply if this parent is in your employ, even though this is an added complication for you. By understanding how these orders work and following best practices for processing them, you can fulfil your obligation and still treat your employees fairly.
FAQs
Yes, and this is very common. The laws of the issuing state dictate the duration and amount of support. However, the laws of your state can dictate when to send payments, which deductions are mandatory, and the maximum amount that can be deducted.
If the levy was issued first, it applies first. However, if the levy was issued after the date the IWO was signed, the IWO takes precedence.