Calculations of Deduction & Net Pay
An employee's biweekly disposable earnings are $680.00. Under federal law, what is the maximum amount that can be deducted for a creditor garnishment?
$170.00 A creditor garnishment involves a court order attaching an employee's wages. The CCPA limits creditor garnishment deductions to the lesser of 25% of disposable pay or the amount that exceeds 30 times the federal minimum wage. Under the CCPA, disposable pay is the employee's gross earnings less deductions required by law.
Using the information below, calculate the employee's net pay. Regular pay $845.50 Overtime pay 67.50 Federal income tax 95.00 State income tax 35.00 Social security tax 56.61 Medicare tax 13.24
$713.15 To calculate net pay, subtract all the deductions withheld from the employee's gross pay (regular pay plus overtime pay).
A company has received a child support order for an employee earning $809.00 semimonthly. Deductions include $28.00 for federal income tax, $61.89 for social security and Medicare taxes, $30.00 for a creditor garnishment, and $25.00 in insurance premiums. Calculate the employee's semimonthly disposable pay.
$719.11 Gross earnings - Statutory Deductions (Taxes) Under the CCPA, disposable earnings are determined by subtracting all deductions required by law from an employee's gross earnings. Deductions required by law include federal income, state income, local income, social security and Medicare taxes.
An employee earns $884.00 semimonthly. The employee's deductions include $36.00 for federal income tax, $67.63 for social security and Medicare taxes, $194.00 for court-ordered child support payments, and $66.00 for a state tax levy. Calculate the employee's semimonthly disposable pay for the creditor garnishment.
$780.37 Gross earnings - Statutory Deductions (Taxes) Under the CCPA, disposable earnings are determined by subtracting all deductions required by law from an employee's gross earnings. Deductions required by law include federal income, state income, local income, social security and Medicare taxes.
A company has received a child support order for an employee earning $930.00 semimonthly. Deductions include $33.00 for federal income tax, $71.15 for social security and Medicare taxes, $30.00 for a creditor garnishment, and $25.00 in insurance premiums. Calculate the employee's disposable pay.
$825.85 Gross earnings - Statutory Deductions (Taxes) Under the CCPA, disposable earnings are determined by subtracting all deductions required by law from an employee's gross earnings. Deductions required by law include federal income, state income, local income, social security and Medicare taxes.
What is a voluntary deduction?
A voluntary deduction is a deduction authorized by the employee. The deduction may be a pre-tax or an after tax amount.
An employee's monthly disposable pay is $750.00 with involuntary deductions received in the following order: $175.00 federal tax levy $50.00 creditor garnishment $75.00 state tax levy $25.00 property tax levy Which involuntary deduction has first priority? A) Federal Tax Levy B)Credit Garnishment C) State Tax Levy D) Property Tax Levy
A) Federal Tax Levy The general priority for involuntary deductions is as follows: 1) child support orders 2) bankruptcy orders 3)federal administrative garnishments 4) federal tax levies 5) student loan garnishments 6) state tax levies 7) local tax levies 8) creditor garnishments.
What action must an employer take when receiving a child support order? A) Make the deduction as required. B) Terminate the employee because of the deduction. C) Discipline the employee because of the deduction. D) Tell the employee to resolve the issue with the state disbursement unit.
A) Make the deduction as required. Under the CCPA, an employer must withhold the lesser of the amount on the Income Withholding Order or the allowed percentage of the employee's disposable earnings, based on the employee's family status and arrearages found on the order, to satisfy the child support order or be subject to penalties for failing to withhold the child support.
If an employee's net pay results in negative net pay, which of the following deductions can be reduced or eliminated to bring the check to $0? A) Voluntary deductions B) Involuntary deductions C Federal taxes D) State taxes
A) Voluntary Deductions Employees with negative net pay must have their deductions reduced before the payroll processing is finalized to no more than the amount of their gross pay, resulting in net pay of $0.00. The order deductions must be withheld is federal taxes, state/local taxes, involuntary deductions (also known as withholding orders), and voluntary deductions.
A true statement regarding an involuntary wage attachment is: A) federal tax levies continue until the obligation is released. B) creditor garnishments are limited to 20% of disposable pay by federal law. C) a parent must be in arrears before withholding can be ordered for child support. D) voluntary deductions are used to calculate the employee's disposable pay.
A) federal tax levies continue until the obligation is released. A federal tax levy continues to be deducted from an employee's wages until the IRS issues Form 668-D, Release of Levy. The maximum creditor garnishment deduction under the CCPA is 25% of the employee's disposable earnings. Under the CCPA, disposable earnings are defined as gross earnings less deductions required by law. Since 1994, all divorce orders with child support require income withholding unless both parties agree to a different method.
If an employer is unable to withhold the entire amount specified on a child support withholding order, the: A) employer tracks the arrearage and deducts it as disposable wages allow. B) deduction is the maximum percentage allowed under the CCPA. C) shortage must be reported to the issuing agency. D) employee must issue a payment to the employer for the shortage.
B) deduction is the maximum percentage allowed under the CCPA. If the amount on the order is greater than the maximum deduction allowed by state or federal law, withhold the lesser of the amount on the order or the maximum allowed under state or federal law (percentage of disposable pay).
An employee's disposable pay is $750.00. Deductions include orders received in the following order: $175.00 federal tax levy, a $125.00 levy for unpaid local property taxes, $75.00 for a state tax levy, and a $50.00 for a creditor garnishment. Which wage attachment has priority? A) Property tax levy B) State tax levy C) Federal tax levy D) Creditor garnishment
C) Federal Tax Levy The general priority for involuntary deductions is as follows: 1) Child support orders 2) Bankruptcy orders 3)Federal administrative garnishments 4) Federal tax levies 5) Student loan garnishments 6) State tax levies 7) Local tax levies 8) Creditor garnishments.
Which of the following statements is true regarding involuntary wage attachments? A) Garnishment deductions are only 20% of disposable pay by federal law. B) Voluntary deductions are used to calculate the employee's disposable pay. C) Federal tax levies continue until the deduction is released by the IRS. D) The priority on wage attachments is (1) child support, (2) creditor garnishment, and (3) federal tax levy.
C) Federal tax levies continue until the deduction is released by the IRS. Federal tax levies continue until the deduction is released by the IRS using Form 668-D, Release of Levy. The general priority for involuntary deductions is as follows: child support orders, bankruptcy orders, federal administrative garnishments, federal tax levies, student loan garnishments, state tax levies, local tax levies, and creditor garnishments. The CCPA limits creditor garnishment deductions to the lesser of 25% of disposable pay or the amount that exceeds 30 times the weekly minimum wage. Under the CCPA, disposable pay is the employee's gross earnings less deductions required by law.
A true statement regarding an involuntary wage attachment is: A) creditor garnishments are limited to 20% of disposable pay by federal law. B) voluntary deductions are used to calculate the employee's disposable pay. C) a creditor garnishment is a court order attaching an employee's wages. D) a parent must be in arrears before withholding can be ordered for child support.
C) a creditor garnishment is a court order attaching an employee's wages. The maximum creditor garnishment deduction under the CCPA is 25% of the employee's disposable earnings. Under the CCPA, disposable earnings are defined as gross earnings less deductions required by law. Since 1994, all divorce orders with child support require income withholding unless both parties agree to a different method.
What is take-home pay?
For a Federal Tax Levy, take-home pay is the employee's gross earnings less all deductions in place at the time the levy is received.
What amounts are subject to levy?
For federal tax levy, the amount of wages subject to the levy is the employee's take-home pay less the exempt amount from IRS Publication 1494.
What is net pay?
Net pay is the amount left after all taxes, involuntary deductions, voluntary deductions have been subtracted from gross pay.
What is form 668-W
Notice of Levy on wages, salary, and other income, directs employers to make a Federal Tax Levy deduction from the employee's wages.
What are disposable earnings?
The CCPA defines disposable earnings as gross earnigns less all deductions required by law. Deductions required by law are taxes and mandated retirement deductions by state law.
FLSA limits what deductions?
The FLSA limits the deductions an employer can make without the employee's authorization. The deduction cannot take employee below minimum wage and overtime pay guaranteed by the FLSA.
Who figures a bankruptcy deduction?
The bankruptcy trustee determines the amount of the bankruptcy deduction found on the bankruptcy order.
What is e-IWO?
The electronic income withholding order process, e_IWO, involves the sharing of information electronically between a state child support enforcement agency and an employer.
Maximum child support deduction
The maximum deduction for child support is 50%, 55%, 60%, or 65% of the employee's disposable earnings. The percentage is determined by the employee's family status and child support arreages.
Child support deductions are sent:
Under Federal Law, child support deductions must be remitted within 7 business day after the deduction is made. State law may have a shorter time period.
Child support deductions begin:
Under federal law, Child Support deductions must begin 14 days following the mailing of the order. State laws may have a shorter time period.
Maximum creditor garnishment:
Under the CCPA, the maximum creditor garnishment deduction is the lesser of 25% disposable earnings or the amount by which the employee's weekly disposable earnings exceeds 30 times the minimum wage.
Maximum federal agency garnishment:
Under the DCIA, the maximum federal agency garnishment deduction is the lesser of 15% disposable earnings or the amount the employee's weekly disposable earnings exceeds 30 times the minimum wage.
Maximum student loan garnishment:
Under the HEA, the maximum student loan garnishment deduction is the lesser of 15% disposable earnings or the amount the employee's weekly disposable earnings exceeds 30 times the minimum wage.
Employees complete Form 668-W Part:
When subject to federal Tax Levy, employees complete part 3 of form 668-W. Part 3 tells the employer the employee's standard deduction and exemptions to determine the amount exempt from levy.
What stops a tax levy deduction?
When the IRS issues Form 668-D, release of Level/Release of Property from Levy, Tax Levy Deductions from an employee's wages.