Bonus/Lump Sum Payments

Money in an envelope

Bonus and lump sum payments are considered employee income and can be garnished to collect past-due child support.  Lump sum payments can include severance, leave payouts, insurance settlements, retirement incentives, commissions, stock options, lottery winnings, awards, and payments resulting from verdicts. 

Some states require an employer to report a bonus or lump sum payment before it is paid.  Other requirements vary among states, including how long the state has to notify the employer of an amount to withhold before paying the employee.  See state lump sum contacts and program information for state-specific requirements.

States may use the Income Withholding for Support form (IWO), a lien/levy, or another state-specific form or process to notify an employer to withhold from a lump-sum payment.  Employers must send all income withholding to the State Disbursement Unit. 

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