INCOME WITHHOLDING OVERVIEW
Income withholding is an administrative or court ordered deduction of child and medical support obligations from a parent's income. The employer (or other source of income, i.e., banks, unemployment compensation, workers' compensation, etc.) deducts the specified amount each pay period and sends the payment to the Ohio Child Support Payment Central (CSPC).
Income is defined as "any form of monetary payment, including personal earnings; workers' compensation payments; unemployment compensation benefits...; pensions, annuities; allowances; private or governmental retirement benefits; disability or sick pay; insurance proceeds; lottery prize awards; federal, state, or local government benefits...; any form of trust fund or endowment; lump sum payments; and any other payment in money.
NOTE: Under Ohio law, direct payment of child support (from one parent directly to the other parent) is considered a gift.
All child support cases are now subject to income withholding. However, income withholding is not required for the self-employed unless that individual falls under the definition of an employee under a contract as an independent contractor and who is an individual, the sole shareholder of a corporation, or the sole member of a limited liability company per Revised Code section 3121.89. State law provides for fines against an employer who discharges from employment, refuses to hire, or takes disciplinary action against an employee in response or reaction to withholding for child support.
Income withholding by employers is the single most effective method of child support collection. During state fiscal year 2002, 74% of all child support collections in Ohio came from income withholding.
Income withholding is just like any other automatic payroll deduction, such as withholding for Social Security or state income taxes. It takes priority over all other legal processes against income (including commercial garnishments) except for an IRS lien.
Ohio employers play a vital role in helping secure the financial future of thousands of children. Working cooperatively to withhold and remit child support payments, employers are a valuable resource in our efforts to secure the financial and medical resources to which these children are entitled.
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What Are the Employer's Income Withholding Responsibilities?
An income withholding order or notice may be Judicial (which originates in the court system and is ordered by a judge) or Administrative (which originates through the local child support enforcement agency's "administrative process" in order to expedite case handling; it is ordered by a child support hearing officer or equivalent; bearing the same authority as a judge.) When child support is ordered for an employee, the employer will receive an Order/Notice to Withhold Income for Child and Spousal Support (JFS 04047). The parent is not required to tell his employer that she/he owes child support.
Upon receipt of an Order/Notice to Withhold Income:
- Document the date of receipt.
- Provide a copy of the Order/Notice to the employee.
- Follow the terms of the Order/Notice.
This Order/Notice requires an employer to do the following:
- Begin withholding the amount indicated no later than the first pay period that falls after 14 business days from the date the order/notice was mailed. The amount may not exceed the limits set by the Consumer Credit Protection Act (CCPA) and similar state laws.
- Send the amount withheld to Ohio Child Support Payment Central (CSPC) no later than seven business days after it is withheld.
- Continue to withhold until official notification to stop. Do not stop withholding for child support until official notification is received from the Child Support Enforcement Agency (CSEA) or the court to stop or to make a change to the withholding.
- Notify the county CSEA of any change that results in ceasing of payments to the obligor (resignation, termination, layoff, retirement, etc.)
An income withholding may come from within the employer's state, or directly from another state. If from another state, it is called "direct income withholding" because it comes directly from another state to the employer, rather than going through the child support enforcement agency in the employer's state.
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Order/Notice to Withhold Income for Child and Spousal Support JFS 04047
Top of the Order/Notice:
Contains information about where the Order/Notice is from and to whom it applies (State/County/City/District, Date of Order/Notice, Court or Case Number, Employer's Information, Employee's Name, Social Security Number, and Case Number)
The Order Information Section:
Provides information about what payments should be withheld. It provides totals, and then breaks down payments to accommodate different payroll cycles; it includes current support, arrears, medical support and other data (such as court fees).
NOTE: Medical support can be ordered on this Order/Notice.
Remittance Information section:
Provides the information necessary to start withholding. This information follows state law of the issuing state. Most of the time the issuing state will be where the employee works.
Additional Information to Employers and Other Withholders Section:
This page is mostly informational.
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Calculating the Amount of the Order
This should be a straightforward process for most child support income withholding orders. The amount to withhold follows the terms of the order/notice and cannot exceed the employee's allowable disposable income.
- Calculate disposable income: gross pay minus deductions.
- Calculate allowable income: Consumer Credit Protection Act (CCPA) limits (%) applied to disposable income + maximum withholding allowed for child support purposes.
- If the employee received certain types of income, there are also special considerations in calculating the amount to be withheld:
- Pre-tax Deductions (elective deductions) - Add back before calculating allowable disposable income.
- Imputed Income (fringe benefits) - subtract before calculating allowable disposable income.
- Tips - Add "reported tips" that passed through employer's hands before calculating allowable disposable income.
Any questions regarding withholding order/notices should be directed to the issuing CSEA's Income Withholding contact person. If you are calling from outside Ohio, please refer to your withholding order/notice for proper contact information.
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In addition to deducting the ordered amount from an employee's regular pay, Ohio law requires an employer to contact the CSEA in the following circumstances:
- The employee is to be paid a lump sum for workers' compensation benefits, severance pay, sick leave, retirement benefits or contributions, bonuses, or profit sharing payments or distributions; and
- The lump sum payment is for $150.00 or more to the employee/obligor (actions can be taken optionally on amounts under $150.00)
Lump Sum payments are income other than personal earnings that the obligor is receiving, or is eligible to receive, as a benefit of employment or as a result of termination of employment.
A "lump sum" payment refers to any payment to the employee in excess of $150 that is not part of regularly scheduled wages. Other examples of lump sum include employee buyout packages, incentives, bonuses, and cash out of vacation pay. "Cash out of vacation" pay means income disbursed to an employee in lieu of actual vacation or leave taken. Any cash out of vacation pay is considered a lump sum payment and shall be processed in the same manner as any other lump sum payment.
Steps in handling a Lump Sum:
- Ohio law requires an employer to notify the county CSEA 45 days prior to the payment, or as soon as the decision is made to make the payment, should that be less than 45 days. The issuance of the check should be held for 30 days after the intended payment date. This allows the CSEA adequate time to determine if any portion of that lump sum payment should be applied/withheld for child support payment.
- Once a determination is made, the CSEA will issue an order of payment for whatever portion is considered owed as child support.
- Send the ordered amount to CSPC.
- Any such payment should include the words "lump sum" on the check to ensure the payment is applied properly and is distinguishable from a standard withholding.
- If arrearages are involved, do not break out the arrearages, just indicate the full lump sum payment amount withheld per the county order.
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An employer may have an employee who has more than one case and order and therefore will receive multiple order/notices to withhold income. Federal law requires that some money will be paid to each order for current support. The employer may need to prorate the amount due. Please refer to the withholding order/notice, JFS 04047 for additional details.
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Prioritizing Multiple Deductions (What does the employer pay first when there is not enough money to pay everything?)
Normally, when an employee is being paid his or her regular earnings, the full amount of the order can usually be withheld. It is only when the paycheck falls short due to special circumstances that the employer may not be able to withhold the full ordered amounts.
However, sometimes an employee's earnings do not stretch far enough to pay all his or her claimants. There are specific laws governing who is to be paid first. There are also laws protecting the employee from having his or her entire paycheck turned over to a third party. The Consumer Credit Protection Act (CCPA) is a federal law that serves as the minimum protection to the employee. The CCPA limits on withholding an employee's paycheck do not forgive the debt owed.
When withholding is limited by CCPA, the employer must prioritize when:
- Multiple orders are received
- There are child support orders and other garnishments (for debt)
- Rule of Thumb: child support income withholding must be paid before all other garnishments.
- Note that not only do income withholding orders take precedence over other garnishments much more money can be withheld for child support than for other garnishment debt.
- There are child support orders and other involuntary deductions (i.e., tax levy, bankruptcy)
- Rule of Thumb: Federal tax debt does take precedence over a child support order if it was served first. The Internal Revenue Service (IRS), however, has stated its willingness to accommodate child support withholding orders that are served after the IRS levy. It is up to the employee to request this from the IRS. It is a good idea for the employer to notify the child support agency of the pre-existing tax levy. The agency has no way of knowing that there is an existing IRS levy.
- Even if an employee declares bankruptcy, he is still obligated to pay child support. Debts due for delinquent child support are not dischargeable in bankruptcy actions.
- An employer may be notified, however, that it is no longer responsible for withholding the payments because a trustee of the bankruptcy court may take over this task. Continue withholding until official notification from the agency or bankruptcy court is received.
- Involuntary deductions that never take precedence over child support withholding (even if the child support withholding order/notice was served after the involuntary deduction):
- Non-tax federal debt (e.g., Administrative Wage Garnishment)
- State and local tax levies
- Creditor garnishment (e.g., garnishment from a store like Sears)
- Assignment of wages (e.g., when taking out a loan, a person can voluntarily sign over his future wages to pay a creditor in the event he defaults on the loan).
How to prioritize:
- For multiple orders, refer to your withholding order/notice.
- Allocate a percentage to each order based on the total dollar amount of the current support orders.
If there is any allowable disposable income (that is, disposable income that falls within the CCPA limits for withholding) left over, then payments for arrears can be withheld up to the remaining balance.
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Income Withholding Links and Resources
For questions regarding remitting lump sum payments, please contact the issuing county CSEA's lump sum contact as found on the County Lump Sum Contact List.
For the name of the issuing county’s contact person and the intrastate county toll free telephone numbers please visit: http://jfs.ohio.gov/County/County_Directory.pdf.
For more information regarding Direct Interstate Income Withholding, please visit: Direct Interstate Income Withholding.
You may access the Ohio support establishment related frequently asked questions and answers at: http://www.jfs.ohio.gov/Ocs/OCSFAQs.stm.
The Ohio Administrative Code rules that are used with intergovernmental cases can be found at: http://codes.ohio.gov/oac/5101%3A12-50-10.
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Last Updated 02/26/2013