F rom Pay Involuntary amp Voluntary Deductions Federal Levies Notice of Levy Form 668W Part 2 thru 5 must be given to employee Part 2 Employee copy Part 3 to be received back from EE completed and sent to IRS ID: 629417
Download Presentation The PPT/PDF document "Section 9 Other Deductions" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
Slide1
Section 9 Other Deductions From Pay
Involuntary & Voluntary DeductionsSlide2
Federal LeviesNotice of Levy - Form 668-W
Part 2 thru 5 must be given to employee Part 2 – Employee copy
Part 3 – to be received back from EE, completed and sent to IRS
Part 4 – to be received back from EE, kept
Slide3
Exempt from LeviesUnemployment compensationWorkers Compensation
Railroad Retirement Act pension and annuities Some armed services personnel retirement and disability paymentsCertain Public Assistance Payments
Child Support Order ALREADY on the books (received prior to the levy)Slide4
To Determine Exempt from Levy
Use part 4 of form 668-W to determine the number of exemptions claimed – do not use Form W4Obtain IRS Pub. 1494 Table for Figuring Amount Exempt from Levy on Wages, Salaries, and Other Income
Based on the pay period and number of exemptions claimed, determine the exempt amount
If you do not receive the completed parts 3 & 4 the exempt amount is determined using the Married Filing Separate bracket on Pub.
1494Slide5
Take Home Pay
Take-home pay is the amount of an employee’s wages that remains after all normal deductions in effect at the time a levy is received have been subtracted from the gross pay
Pre-existing deductions
If deductions increase as a result of a pay increase, continue to subtract from gross wages
If deductions increase as a voluntary decision by employee, do not subtract increase amount from gross wages
Example: an employee with a 3% 401K deduction cannot increase their percentage. However, if they receive a pay increase, the resulting additional 401K amount is allowed as a subtraction from gross wagesSlide6
Release of LevyForm 668-D, Release of Levy/Release of Property from Levy – the form will include the final payment amountVoluntary Deduction Agreement –
Form 2159Slide7
Child Support
Uniform Withholding Notice for Child SupportStart withholding based on the effective date OR 14 days of the order date
Disposable Pay –
all deductions
required by LAW –
not benefits, might
vary by stateSlide8
Child Support Limits50% EE is Married60% EE is Single
55% EE is Married +12 weeks in arrears65% EE is Single +12 weeks in arrearsTotal of all support orders has to be at or below the maximums – state limits may be lowerSlide9
Multiple OrdersState law governs the multiple orders are handled. If the orders are from different states – work state law applies .
Allocation methods for multiples:Allocate based on percentageAllocate equally
1
st
come/1
st
serveSlide10
e-IWO & Medical IWOInternet accessible way of obtaining, accepting, rejection, termination & lump sump paymentsMedical Insurance Support Provision – by state. Non custodial parent provides medical insurance coverage (at equal cost as other employees) for their children.Slide11
Creditor Garnishment Governed by Federal and State lawUnder the DOL, W&H Division
Consumer Credit Protection Act, Title IIIRestricts states regulationsRestricts amount that can be garnished
Employee may not be
terminated because of
their wages being
garnishedSlide12
What’s Covered & Limits
Covered in CCPAAdministrative Wage GarnishmentAlimony
Child & Medical Support
Creditor Debt
Student Loan
25% of weekly disposable earnings OR amount over the 30 times federal minimum wage (30x7.25=217.50)Slide13
BankruptcyOrder is from court – until received, employer pays all garnishments in place. Once received all orders stop EXCEPT child support.
Bankruptcy order supersedes all orders including levies. Once received all bankruptcy orders are paid to trustee that delegates the funds – again, exception is child support.Slide14
Student LoansHigher Education Act allows garnishmentMax for single garnishment is 15% or 30x federal minimum wage
Max for multiple garnishments is 25% or 30x federal minimum wageCan not discharge, 30 day notice before start of garnishment
Termed EE who is rehired in 12 mo’s is given 12 additional mo’s from reemployment before garnishment can be put into effect.Slide15
Fed Agency DebtNon tax debtAgency will provide 30 day notice.
Limits are the same as loans (15% on one, 25% on multiple, or 30X federal minimum wage)Slide16
Garnishment Priority Table
Child support
Bankruptcy
Federal administrative garnishments*
Federal tax levies*
Student loan**
State tax levies
Local tax levies
Creditor garnishments
Employer deductions (e.g., for benefits)
Employee voluntary deductions
*All deductions in effect when a federal admin. Wage garnishment or fed. tax levy is received have priority over the order
**The law provides no guidance, but the Dept. of Ed allows child support to have prioritySlide17
Legal concernsContact Bankruptcy trustee if there are any questions on support orders or any other garnishmentsAll orders are legal documents - any omissions may result in fines and penalties on the employer
Never deduct more than what’s allowed by lawSlide18
FLSA restrictionsBoard, lodging, and other facilities provided by the employer for the employee’s benefit may be deducted even if the employee’s wages will then be below the minimum wage. The employee’s participation must be voluntary.
Facilities are board, lodging, meals, housing, etc.
Facilities ARE NOT tools, required uniforms, company provided security, etc.
Section 9.1-7 Slide19
Voluntary DeductionsWage Assignments – agreement with a creditor in lieu of garnishment – state laws may apply Union Dues – based on collective bargaining agreement
US Savings Bonds – Not allowed to be thru direct deposit as of 2011Slide20
Charitable ContributionsDonations from payroll of $250 or greater must be substantiatedMust include: amount of cash and noncash contributed, whether goods or services were provided in return, description and estimate of value of services
Documents include: pay stub, W2,
document from org., pledge card
$250 is applied to each
deduction separately