Section 9 Other Deductions - PowerPoint Presentation

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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

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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