Payroll Garnishment Rules

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A garnishment is an involuntary payroll deduction that a creditor or government agency secures to collect on an overdue bill. Although most payroll assignments require a court order, the Internal Revenue Service can garnish wages simply by serving notice. State and federal laws provide you with some rights and determine how much of your wages are subject to seizure, but an employer has no choice other than to comply with a writ of garnishment once the order is received.

Wage Garnishment Limitations

Title III of the Consumer Credit Protection Act limits how much a creditor can take from your wages. For most garnishments, the maximum deduction is the smallest of either 25 percent of your disposable earnings -- gross income minus involuntary payroll deduction for payroll taxes, Social Security and unemployment insurance -- or the amount by which your wages exceed 30 times the current federal minimum wage. Although most state laws follow federal guidelines, check the laws for your state, as some state laws protect more of your wages.

Read More: Wage Garnishment & Unemployment

Garnishment Procedures

State laws define execution procedures for most wage assignments. Although such laws may vary slightly, most require that the creditor provide you with a copy of the request for the order, the order and a claim exemption form, which protects certain types of income, such as disability and Social Security, from garnishment. As the garnishee, your employer will also receive a wage garnishment order and a document called “Interrogatories for earnings.” The interrogatories document asks questions about your income and current payroll tax deductions to determine your disposable income and calculate the amount of the garnishment withholding. An employer must provide and verify that all answers are true under penalty of perjury.

Federal Garnishments

Wage assignment percentages for child support, alimony, unpaid taxes and federal student loan debt are different from percentages for consumer debt. Child and spousal support, which can consume 50 percent to 60 percent of your disposable income, take precedence over any other wage assignment. A federal student loan assignment can consume no more than 10 percent. The percentage that the IRS can garnish depends on how many dependents you have and on your deduction amounts.

Debtor Protections

The Consumer Credit Protection Act offers limited protections from losing your job over a wage assignment. The law says an employer can’t fire you over a single wage assignment. However, the law does not protect you if your employer receives a writ for two or more separate garnishments.