How far do employer responsibilities extend when it comes to child support deductions and getting those reflected on a paystub?
The answer to that question depends on several factors. Most importantly, your decision will be based on whether you’ve received an income withholding order. That document obliges employers to deduct a certain amount from an employee’s wage for the purpose of securing a child support payment.
Instances in Which Employers Have to Get Involved
Did you know that in the US, only 44 percent of custodial parents receive the full amount of child support that they’re entitled to?
This means that very often, individuals who have to pay child support don’t do that voluntarily.
In such instances, employers may have to get involved.
A child support withholding document is issued by the respective court, mandating a payroll deduction in the absence of voluntary contributions. All employers who are required to make such withholdings will receive a court order that has to be reflected in the wage payment, the deductions and the paystub that a worker receives.
As an employer, you will receive an Income Withholding for Support (IWO) form that provides details about the worker who has unpaid child support, the amount you have to deduct as an employer and how to send the deducted amount to the appropriate state disbursement unit.
Keep in mind that a child support withholding notice doesn’t give you opportunities to fire the respective employee. People who have unpaid child support benefit from protection under the Consumer Credit Protection Act (CCPA).
How to Handle a Child Support Withholding Order
Once you receive a child support withholding order, you’ll need to make calculations and apply deductions before paying out salaries.
Check the IWO expiration date, the completeness of the order and whether it lists all deductions correctly. You can verify the contents of the order or check for specific mistakes with the sender (whose information should be listed on the order itself).
After you’ve made sure that all of the calculations are accurate, you can move ahead to withholding child support in the manner listed in the court document you’ve received.
There could be some variations from one state to another. In most places, employers need to start withholding child support amounts no later than during the pay period that starts 14 days after the date on which the IWO was mailed.
Employers can be subjected to fines if they don’t make a deduction within the designated timeframe. So, if you have any questions or uncertainties about the calculations and the deductions, consult a professional to guarantee compliance during the upcoming pay period.
In most parts of the US, you can charge an administrative fee for withholding child support. There are local limits on how much that fee can amount to. This is another essential to check out in order to comply with state laws.
Deducting Child Support from Salaries and Generating Accurate Paystubs
Once you receive the IWO, you have to make the child support deduction during every upcoming pay period.
Chances are that your employee will ask you not to deduct the child support amount. This isn’t an arrangement you should be agreeing to. If a person disagrees with the child support amount they’re being charged, they can take the situation to court or the respective unit that has issued the IWO.
Keep a couple of things in mind when making child support deductions:
Child support is a not a pre-tax deduction
This means you have to withhold taxes before calculating the child support deduction
You need to know how to calculate an employee’s disposable net income
Usually, a child support deduction is based on disposable net income and it grows progressively with the sum
As an employer, you can deduct up to a certain amount. The CCPA determines the limit to protect workers from getting too much of their salary deducted in the form of child support. In some states, local limits that are lower than the ones mandated by the CCPA apply.
Here are a few pointers pertaining to the CCPA limit on child support deductions:
A 50 percent deduction applies to the disposable income of an employee who supports another spouse or a child
A 55 percent deduction applies in instances when the above-mentioned conditions apply, plus payments have been 12 or more weeks late
A 60 percent deduction applies to employees who do not support another child or a spouse
A 65 percent deduction applies when the conditions in the previous point apply, plus payments have been 12 or more weeks late
After making calculations, applying deductions and generating paystubs, you will need to remit withheld sums to the proper state disbursement unit.
As a general rule of thumb, employers have seven business days after paying employee wages to remit child support payments.
You need to continue with the process and make deductions until you receive an order to stop doing so.
If you have to make child support withholdings for several workers, you may be entitled to remitting a single payment per pay period to reflect all deductions. These amounts go to the same state disbursement unit and they’re handled accordingly, whether received individually or in a combined amount.
Does a Paystub Have to Feature a Child Support Deduction?
We have outlined the process of making a paycheck stub and personalizing the document. Using a paystub generator simplifies the process significantly but you still have to complete a number of important calculations.
A typical paystub has a section that reflects deductions employees are subjected to before receiving their wage.
All withholdings have to be featured in this section. This means listing a child support deduction and making sure that the accurate amount is featured in the document that the worker receives.
If you need some additional information on processing an Income Withholding Order and creating documentation to reflect such a deduction, you can check out the guide developed by the Office of Child Support Enforcement under the US Department of Health & Human Services.