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Processing an Income Withholding Order or Notice

Published: March 5, 2015
Information About:
Employers, Courts, Other Public Partners
Employer Responsibilities, Income/Wage Withholding


General Information

This information applies to you if you are:

  • an employer - private or federal agency
  • an income withholder who makes payments to non-employees or independent contractors

Income withholding is a deduction of a payment for child support from a parent’s income.  This order can be from a court or administratively ordered by a child support agency.

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Important Points to Remember

  • As an employer or income withholder, you must honor an income withholding order for child support if the sender uses the Office of Management and Budget (OMB) form, Income Withholding for Support (IWO) (OMB-0970-0154).  The IWO Instructions explain what each field means.
    • You must withhold child support before all other garnishments, except an Internal Revenue Service (IRS) tax levy entered before the date the underlying child support order was established.
  • You must withhold a higher percentage of the employee’s or obligor’s disposable income for child support than for other garnishments (see federal Consumer Credit Protection Act).
    • You must withhold payments for each pay period, and in most cases, send them to the state disbursement unit (SDU).  In private cases (not enforced by the child support agency) with a support order issued on or after January 1, 1994, you must also send payments to the SDU.  There are exceptions to this rule.
  • Anyone may send an IWO, including state, tribal, and territorial child support agencies; courts; tribunals; attorneys; and individuals.
  • An IWO is valid throughout the country, including U.S. territories.
  • Notify the sender if the person is not an employee.  If you are an income withholder, you may notify the sender but are not required to do so.

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Processing the Order/Notice

When you receive the IWO order, you should:

  1. Document the date received.
  2. Determine if the noncustodial parent (NCP) listed on the IWO is employed by your company.
    1. If the NCP is no longer or has never been employed by your company, you must notify the child support agency by completing and returning page 3, Notification of Termination or Employment Status, to the sender or by using electronic interfaces, such as e-IWO or the Employer Services web application on the federal Office of Child Support Enforcement’s Child Support Portal.
    2. If the NCP is an employee, see step 3.  
  3. Determine if the order is “regular on its face.”  See the “Note” box on page 1 of the IWO form.
    1. The IWO Instructions have additional information about when to return an order that is not regular on its face.
    2. If the IWO is not regular on its face, check the “Return to Sender” box and return it to the sender.
  4. Get a copy of the underlying child support order that allows income withholding if anyone other than a court or child support agency sends the IWO because the form is a notice and not an order.  If the underlying child support order is not attached to the notice, return the IWO to the sender.
  5. Give a copy of the IWO to the employee if the IWO has been issued by another state or if the appropriate check box is checked.
  6. Most importantly, follow the terms of the order.

Only the NCP has the right to dispute the terms of a child support IWO and should contact the issuing agency or tribunal.  As an employer or income withholder, you cannot contest an income withholding order; however, you must contact the issuing agency if you cannot implement the withholding because a withholding for current support is already in place for the child and NCP.  For more information about multiple orders, see the Special Situations.

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Intergovernmental/Interstate IWOs

When processing the IWO, you must consider the laws of both the order-issuing state and the employee's work state, depending on the action or circumstance.  See the chart below to determine which state law prevails.

Follow the law of When dealing with
the issuing state
  • Duration and amount of child support - both current and arrears
  • Medical support terms
  • Where to send payments
  • Payment of fees and costs charged (if any) by the state child support agency, issuing court, or custodial party’s attorney
the employee’s work state
  • When to begin withholding
  • When to send payments (may be from one to seven days after the pay date)
  • Mandatory deductions
  • Maximum amount to be withheld (within CCPA limits)
  • How to allocate withholding across multiple child support orders
  • Administrative fee that employer is permitted to charge
  • Other terms and conditions that may be set by state law


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Withholding Calculations

You must follow these steps to determine the maximum amount to withhold for child support from an employee’s or obligor’s income, if the payment is “earnings” as defined by the Consumer Credit Protection Act.  Follow the information in Nonemployees/Independent Contractors, if you must withhold from your payment to an obligor who is not an employee.

Income is 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.

  1. Disposable income = gross pay - mandatory deductions.
    • Disposable income is the amount that is left after subtracting mandatory deductions from gross pay.
    • Mandatory deductions include federal, state, and local taxes; unemployment insurance; workers’ compensation insurance; state employee retirement deductions; and other deductions determined by state law.  Health insurance premiums may be included in a state’s mandatory deductions; they are mandatory deductions for federal employees.
    • Disposable income is not necessarily the same as net pay.  An employee may have a deduction taken from his or her pay that is not mandatory, such as union dues or a car loan payment.
  2. Allowable disposable income = disposable income x CCPA % limit
    • Allowable disposable income is the maximum available for child support withholding. Even if the withholding order specifies a higher payment, the allowable disposable income is the most you can withhold.
      • The federal CCPA sets limits on withholding from an employee’s or obligor’s disposable income based on the current family situation and child support payment history.  The CCPA protects an employee from having too much withheld.  Some states have enacted laws that provide even more protection to the employee’s income.
    • The withholding limits set by the federal CCPA are:
      • 50 percent - Supports a second family with no arrearage or less than 12 weeks in arrears
      • 55 percent - Supports a second family and more than 12 weeks in arrears
      • 60 percent - Single with no arrearage or less than 12 weeks in arrears
      • 65 percent - Single and more than 12 weeks in arrears


    To decide how much to withhold, if then
    allowable disposable income ≥ ordered amount, withhold the ordered amount
    allowable disposable income < ordered amount, see Special Situations - Not Enough Money

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Withholding Examples

  • Weekly gross pay is $760
  • Weekly child support due is $295
  • Mandatory deductions total is $151
  • Employee or obligor is single and does not owe back child support

The law of the state where the employee works, or the “principal place of employment,” determines which deductions are mandatory.  In some states, the example below would change because deductions, such as health insurance and union dues are considered mandatory.

Net pay and disposable income are not the same.  The amount of disposable income, $609, is used to determine child support withholding limits, rather than the net pay, $469.

  Disposable Income Net Pay
Gross pay $760.00 $760.00
Federal income tax - 95.00 - 95.00
FICA - 45.00 - 45.00
Medicare - 11.00 - 11.00
Health insurance (pre-tax)   - 25.00
Union dues   - 10.00
Savings bonds   - 25.00
Union pension   - 30.00
Credit union car loan   - 50.00
  $609.00 $469.00


  • Gross pay - mandatory deductions = disposable income:
    760 - $151 = $609
  • Disposable income x CCPA % limit = allowable disposable income:
    609 x 60% = $365.40
    • Note 60% is the applicable CCPA limit because the employee or obligor 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 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.  You may only withhold a maximum of $365.40.  This means $34.60 will be overdue.  The employee or obligor can pay this amount directly to the issuing agency to avoid increasing arrears.

Pre-Tax Deduction

Pre-tax deductions, such as 401(k) plan contributions, reduce taxable earnings for tax purposes, but they do not reduce disposable income for child support.  Although the employee voluntarily elects to trade current disposable income for a future benefit, this income is still available for child support.

In calculating disposable income, pre-tax deductions must be added to the employee’s taxable wages before determining the obligated employee’s allowable disposable income.

Gross pay $1,000
Deduct 401(k) contribution pre-tax deduction - $100
Taxable earnings $900
Deduct mandatory deductions - $250
Net pay $650
Add back pre-tax deduction + $100
Disposable income $750


Value of Fringe/Noncash Benefits

The value of fringe benefits (such as a take-home vehicle, free parking space, or other noncash benefit) is taxable but is not considered “income” for the purpose of calculating disposable income.

To calculate disposable income, the value of fringe benefits is subtracted from the employee’s gross pay before determining the employee’s allowable disposable income.

Gross pay $1,000
Add value of take-home vehicle + $300
Taxable earnings $1,300
Deduct mandatory deductions - $350
Net pay $950
Subtract value of take-home vehicle from net pay - $300
Disposable income $650


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Special Situations

Multiple Income Withholding Orders - Same Employee and Same Child

There can be only one withholding order for current support for a child, and duplicate orders must be resolved by the senders.  Follow these steps if you receive a duplicate withholding order:

  1. Continue to honor the first order received.
  2. Give a copy of the second order to your employee.
  3. Contact the agency, court, or party that sent the second withholding order to say that you are already sending current support 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.
  4. Contact the agency, court, or party that sent the first withholding order and inform them of the second order.

Multiple Income Withholding Orders - Same Employee and Different Children

You must withhold payments on each order for current support if there are multiple orders for the same employee or obligor.  State laws define the method for allocating money toward current support for each order.  Do not pay IWOs on a “first come, first served” basis.

Not Enough Money to Withhold Full Ordered Amount

If there is not enough allowable disposable income to pay the full amount on all orders, you must follow the allocation method of the employee’s work state or “principal state of employment” to determine how much to pay on each order.


  • 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:  $360/month
  • Assume allowable disposable income:  $180


  • Total current support owed:  $227/month
  • Total arrears owed:  $15/month
  • The allowable disposable income ($180) is not enough to withhold the entire amount of current support due for these three orders ($227).  You cannot withhold any money to pay the arrearage.

Allocation Methods:
States use one of two methods to allocate payments among multiple withholding orders:  the proration method (used by 49 states/territories) or the equal method (used by 6 states/territories).

Proration Method:
Pro-rate by allocating a percentage to each order based on the total dollar amount of current support orders.  Use the steps below.

  1. Add total current support due on all withholding orders.
  2. Divide each order’s current support due by the total of all orders to figure each order’s percentage of the total.
  3. Withhold the percentage of allowable disposable income for each order.


    Order A $90.00 ÷ 227 = 39.65%
    Order B $75.00 ÷ 227 = 33.04%
    Order C $62.00 ÷ 227 = 27.31%
    Total $227.00 = 100.00%

    Allowable disposable income (maximum that may be withheld): $180

    Order A $180 x 39.65% = $71.37
    Order B $180 x 33.04% = $59.47
    Order C $180 x 27.31% = $49.16
    Total withheld $180.00

Equal Method:

Share equally by dividing the allowable disposable income by the total number of orders.  Use the steps below.

  1. Allowable disposable income (maximum that may be withheld):  $180
  2. Three orders for the same employee (Orders A, B, and C)
  3. 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.  Remember, the child support order is the underlying basis for the income withholding order.

Employers and income withholders do not usually know the date of the original order.  We recommend the following actions:

  • If you receive a child support IWO with an IRS 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 you receive an IRS tax levy with 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.
  • Contact the trustee if you have questions (if one has been appointed by the court).

An IRS tax levy is the only deduction that takes precedence over child support.  Remember, child support should always be withheld before the following voluntary and involuntary deductions:

  • Assignment of wages
  • Nontax federal debt
  • State and local taxes
  • Creditor garnishments 

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Other Garnishments and Child Support


A child support IWO must be paid before other garnishments.  When you have a child support IWO and anpther garnishment for an employee or obligor, follow these steps:

  1. Deduct the child support withholding.
  2. Determine the lesser amount of:
    1. The difference between the weekly disposable income (before the child support withholding) and 30 times the federal minimum wage
      [30 x $7.25 = $217.50]
      • If the income is paid biweekly, multiply the minimum wage times 60
        [60 x $7.25 = $435]
      • If the biweekly disposable income is less than $435 or the weekly income is less than $217.50, no withholding for garnishment may be made.
    2. 25% of the weekly disposable income.
  3. For the garnishment, you may withhold the amount remaining after the child support deduction up to the lesser amount of a) or b) figured 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.

  1. 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.)
  2. Determine the lesser of:
    1. Disposable income minus 30 times minimum wage:
      $700 - $217.50 = $428.50
    2. 25% of disposable income:  25% x $700 = $175
      $175 is the lesser of these two amounts.
  3. 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, so you cannot withhold 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.

  1. 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)
  2. Determine the lesser of:
    1. Disposable income minus 30 times minimum wage:
      $1000 - $217.50 = $752.50
    2. 25% of disposable income:
      25% x $1000 = $250

      $250 is the lesser of these two amounts
  3. Difference between allowed amount for garnishment and the child support deduction taken:
    $250 - $140 = $110

You can withhold $110 for Tony’s Sears garnishment.

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Terminations of Employment

If you are an employer and you receive an IWO for a person who is terminated or was never employed, you must report the termination by fax, mail, or online.  Notify the sender by:

  • Faxing or mailing the completed Notification of Employment Termination or Income Status section of the IWO to the sender
  • Electronically using either e-IWO or Electronic Terminations, also called eTerm

If you are an income withholder, you may report voluntarily using the same methods described above.

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Bankruptcy and Child Support

Even if an employee or obligor declares bankruptcy, he must still pay child support.  Debts due for delinquent child support are not dischargeable in bankruptcy actions.  If you receive a bankruptcy order, you should notify the child support agency or sender, the trustee if one is appointed, and the bankruptcy court that a child support IWO is in force.  Always follow the payment instructions from the trustee and bankruptcy court.

If you receive notice about a bankruptcy filing for an employee, you 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 child support, even if not called that.  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
  • Governmental unit

If there is any doubt about whether a withholding order is a domestic support obligation, please contact the agency, court, or entity that issued the withholding order or the trustee.

You may be notified that you are no longer responsible for withholding the payments because a trustee of the bankruptcy court has taken over this task.  Continue withholding until you receive official notification from the agency or bankruptcy court.

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Nonemployees/Independent Contractors

If you receive an IWO for a nonemployee, and you make payments to that person, you must withhold child support from those payments.  Because they are not employees, CCPA protections do not apply.  You can find state-specific limits for nonemployees on the Income Withholding Requirements matrix.

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Additional Information for Federal Agencies

Withhold From Regular Pay and Benefits

Child support is withheld from an employee’s regular pay, but it may also be withheld from income other than a paycheck.  For federal employees, the benefits from which child support may be deducted are below.

Per Office of Personnel Management (OPM) regulations (5 CFR 581), cash awards, including performance-based cash awards, are considered income, as is any payment for accrued leave.

  • Periodic benefits
    1. Pensions
    2. Retirement benefits
    3. Retired/retainer pay
    4. Annuities
    5. 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 Supplemental Security Income benefits), Veterans Affairs (any part of the Veterans Affairs payment that is in lieu of waived retired pay or waived retainer pay), Railroad Retirement Board, and Black Lung.

For more details, please refer to the OPM regulations on processing garnishment orders for child support or alimony in Title 5 of the Code of Federal Regulations.

Regulations and Statutes for Income Allocation

Regulations and statutes on income allocation for federal agencies are helpful if needed by legal staff.

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For more information, contact the Employer Services Team at employerservices@acf.hhs.gov.