Page 236 - Essentials of Payroll: Management and Accounting

Payr oll Deductions
enforced federal laws help to track down parents who are not making
support payments; these laws also require employers to withhold vari-
ous amounts from the pay of parents in arrears to meet mandated child
support payments.

The maximum amount of an employee’s disposable earnings subject
to child support withholding is 60 percent of his or her pay,or 50 percent
if the employee is already making payments to support other children or
spouses. Both of these percentages increase by 5 percent if an employee
is 12 or more weeks in arrears in making support payments.
To calculate disposable earnings, subtract all legally mandated
deductions from an employee’s gross pay, such as federal and state

income taxes, Social Security and Medicare taxes, and any locally man-
dated disability or unemployment taxes.Voluntary deductions, such as
pension and medical insurance deductions,are not used to calculate dis-
posable earnings.
Example. The Dim Bulb I.Q. Testing Company receives a court
order to withhold child support payments from the pay of its employee
Ernest Evans, in the amount of $390 per weekly paycheck.The payroll
manager needs to determine how much can actually be withheld from
Mr. Evans’s pay, who earns $850 per week and does not make support

payments to another child or spouse. His typical paycheck remittance
advice is:
Gross pay $850
Federal income tax 125
State income tax 35
Social Security tax 53
Medicare tax 12
Medical insurance 62
401(k) plan deduction 80
Net pay $483

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