How do I set up a wage garnishment?
Background
If you receive a wage garnishment order for an employee, you will need to withhold deductions from the employee’s paycheck and send the money to the agency listed in the order. Garnishments can be for court ordered child support, tax levies, or creditors.
For more information, see our payroll blog article How Does a Wage Garnishment Work?
For specific information about child support garnishments, see How to Set Up Child Support Deductions.
How to garnish wages: Setting up wage garnishments in Patriot
First, you will need to set up a company level deduction, and then assign the deduction to the employee. We recommend you set up different company level deductions for different types of wage garnishments, such as child support, tax levy, etc.
Note that Patriot Software does not handle payment of wage garnishments to state agencies or courts. You are responsible for sending these funds directly.
Setting up the company level deduction
This will be a one-time task for each type of wage garnishment deduction you set up.
- Go to Settings > Payroll Settings > Deductions & Contributions.
- Next to the Deductions section, click “Add New.”
- For the Type, this will most likely be set up as either “Post-Tax” or “Post-Tax Percent of Disposable Net Pay,” depending on the garnishment. For example, some child support garnishments want you to calculate the deduction as a percentage of pay after remaining income taxes are withheld. In this case, you will choose “Post-Tax Percent of Disposable Net Pay.”
- Add a Name, such as “Child Support.”
- Select the Method, either a fixed dollar or percent of pay.
- Leave the Amount field blank. When you assign to the employee, you will enter the amount there.
- You can leave the Limits blank when setting up the deduction at the company level. When you assign to the employee, you can enter limits there.
- You do not need to enter anything for the W-2 Box or Label fields.
- Click Save.
You can repeat this step if you need to set up other types of wage garnishment deductions in order to assign to employees. If an employee has more than one wage garnishment, you will need to set up separate company-level deductions, since each company-level deduction can only be assigned to an employee once.
Assigning the deduction to the employee
- Go to Payroll > Employee List > Click Employee Name > Deductions & Contributions
- Next to the Deductions section, click “Add New.”
- Select the deduction from the dropdown list. These are the deductions you have set up at the company level. Remember, if the employee has already been assigned a wage garnishment deduction and needs another, you will need to set up a new company-level deduction first in order for it to appear in the dropdown.
- The Method is set at the company level and cannot be changed here.
- Enter the Amount Per Pay.
- Enter any limits the wage garnishment may have.
- Click Save.
The wage garnishment is now set up on the employee’s record and will be used in payrolls. Every time you run a payroll, the garnishment will be deducted from the employee pay, with the net pay equaling the remaining amount. Keep in mind, if you have placed limits on the garnishment, the software will stop deducting the garnishment accordingly. You will need to remit garnishments to the proper agencies based on the garnishment notice you received. Patriot does not remit garnishments at this time.
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