This information applies to you if you are:
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.
When you receive the IWO order, you should:
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.
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||
|the employee’s work state||
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.
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.
|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|
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|
|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|
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 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.
|Deduct 401(k) contribution pre-tax deduction||- $100|
|Deduct mandatory deductions||- $250|
|Add back pre-tax deduction||+ $100|
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.
|Add value of take-home vehicle||+ $300|
|Deduct mandatory deductions||- $350|
|Subtract value of take-home vehicle from net pay||- $300|
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:
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.
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.
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).
Pro-rate by allocating a percentage to each order based on the total dollar amount of current support orders. Use the steps below:
|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|
Share equally by dividing the allowable disposable income by the total number of orders. Use the steps below:
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:
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:
A child support IWO must be paid before other garnishments. When you have a child support IWO and another garnishment for an employee or obligor, follow these steps:
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.
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.
You can withhold $110 for Tony’s Sears garnishment.
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:
If you are an income withholder, you may report voluntarily using the same methods described above.
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:
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.
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.
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.
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 on income allocation for federal agencies are helpful if needed by legal staff.