For example, in California, you must begin withholding no later than the first pay period occurring 10 days after receiving the IWO. [2] X Research source In Ohio and Indiana, you must begin withholding no later than 14 business days after the mailing date of the IWO. [3] X Research source [4] X Trustworthy Source State of Indiana Official site for state-approved sources related to life in Indiana, including laws, services, and culture Go to source The federal Office of Management and Budget (“OMB”) approved a standard form,[5] X Research source known as an IWO, for use in income withholding for child support. [6] X Research source This is the form you will receive.
If the individual has (1) never worked at your company or (2) no longer works at your company, you must complete the section entitled “Notification of Employment Termination or Income Status” on the fourth page of the IWO. [7] X Research source You will then need to notify the sender of the IWO by returning the completed IWO to their contact address, which should be listed on the bottom of the fourth page. [8] X Research source
The form instructs you to send withheld income to an entity other than a state disbursement unit (“SDU”). Each state has an SDU, which is the government agency that collects withheld income for child support and distributes that income to the person responsible for the child’s care. The form doesn’t contain enough information for you to process the withholding. The form is altered in some way or contains invalid information. The form lists an amount to withhold that is not a dollar amount. The form is not the OMB-approved IWO form. If you believe the IWO is not “regular on its face,” you must check the “Return to Sender” box on the second page of the IWO and return the form to its sender.
If the IWO is a Notice, it must be accompanied by the child-support order that authorizes income withholding for this purpose. [12] X Research source If the IWO is a Notice and is not accompanied by a copy of this child-support order, the IWO is not “regular on its face” and must be returned to its sender. [13] X Research source
Federal, state, and local taxes. Unemployment insurance. Worker’s Compensation insurance. State employee retirement deductions. Other deductions determined by the law of your state (e. g. , health-insurance premiums). For example, New York state law requires the following six mandatory deductions: federal income tax, social-security tax, medicare tax, state income tax, city/local income tax, and involuntary retirement/pension-plan payments. [16] X Research source
Disposable Income = Gross Pay – Mandatory Deductions Gross pay includes not only salary, but also other forms of income such as bonuses, commissions, or severance pay. [18] X Trustworthy Source State of Massachusetts Official website for the State of Massachusetts Go to source By way of example, let’s say that the employee’s weekly gross pay is $800, and the amount of mandatory deductions (according to your state’s law) is $200. This means that this employee’s weekly disposable income is $600 ($800–$200).
If the employee supports a second family, the maximum withholding amount is 50% of the employee’s disposable income. If the employee is single, the maximum withholding amount is 60% of the employee’s disposable income. If the employee is behind by more than 12 weeks on child-support payments, add an additional 5% to the maximum withholding amount (i. e. , 55% for second family, 65% for single). Some states use a percentage more favorable to the employee than the federal law, meaning the maximum withholding amount is less in certain states. Check your state’s law to determine the maximum amount you can withhold from the employee’s disposable income. [20] X Research source
Allowable Disposable Income = (Disposable Income) x (the maximum withholding amount expressed as a percentage). Returning to our example, let’s say this employee is single, is not behind on child-support payments, and that your state uses the federal maximum-withholding percentages. That means the maximum amount of this employee’s weekly income that can be withheld is 60%. So, the allowable disposable income for this employee would be $360 ($600 x . 60). This is the maximum amount available for child-support withholding.
For example, Texas state law requires this payment to be made on the date the employee’s income was withheld if submitting by mail, or no later than the second business day after that date if the employer is transferring the funds electronically. [23] X Research source
If allowable disposable income is greater than the required child support, withhold the full amount of required child support. If allowable disposable income is less than the required child support, withhold the amount of allowable disposable income only. The employee is required to make up the difference by paying the agency that issued the IWO separately to avoid going further into debt. [25] X Research source So, let’s say our fictional employee owes $300 in weekly child support. Because this employee’s allowable disposable income is $360, you would withhold the full amount of child support ($360 > $300). If the weekly child support owed was $400, you would only withhold $360 (because an employee’s allowable disposable income is the maximum amount you can withhold).
For example, Kentucky state law requires you to include, for each employee subject to withholding, the employee’s name, social-security number, court-assigned case number, specific amount withheld, and the date payment was withheld. Information relating to submission of payments will be included in the IWO, along with the contact information for the relevant SDU.
