ACCOUNTING CS

Setting up creditor garnishments

To set up an employee with a creditor garnishment and have the application make the appropriate calculations during payroll check entry, follow these steps.

See also: Garnishment overview

Creating creditor garnishment payroll items

The first step is to create a payroll item for the client to use for employees with creditor garnishments.

1. Add a new deduction item for the client.

   Note: We recommend that you do not enter an agent in this section. You will select the appropriate agents when you add creditor garnishment order information for the employee.

2. In the Special Type section of the Main tab of the Payroll Items screen, choose the Garnishment option and select Creditor garnishment from the drop-down list.
   
   
3. Click Enter to save your changes

Adding the new deduction item to the employee record

1. In the Setup > Employees > Payroll Items tab, make the new garnishment deduction item active for the employee by marking its checkbox in the Deductions grid.
2. Click the  button for the new deduction item.
3. Enter or select the appropriate information in the Creditor Garnishment Orders section of the Main tab of the Employee Payroll Item Settings dialog.
   
   
   
   • Case Identifier. (Required) Enter the case identification number. 
   • Order date. You can enter the date on which the order was issued.  This field is not mandatory, but it is used to determine the priority of multiple garnishments when needed.
   • Order State. Select the state in which the order was issued.
   • Agent. You can use this field to assign a payroll agent to the creditor garnishment order to use for generating liabilities. The vendors listed in the Agent drop-down list are vendors that are set up with the Payroll Agent vendor type in the Setup > Vendors screen.
   • Percent or Amount. Specify the percent or the amount that is to be deducted per paycheck.
   • Total Order amount. You can use this field to specify a perpetual limit for the case. If you leave this field at its default $0.00 amount, the application will assume that the garnishment has no limit.
4. Save the employee payroll item information.

Limits

Limits are restricted by the Consumer Credit Protection Act (CCPA). 

Accounting CS withholds a creditor garnishment amount that is the lesser of:

• A percentage of disposable income (pay amount after all taxes including state and local) or
• The amount by which the weekly disposable income exceeds 30 x the federal minimum wage. (This calculation changes based on the pay frequency)

• For specific information about how the Department of Labor calculates creditor garnishments and limits, see refer to their Fact Sheet #30.
• See US Department of Treasury Standard Form 329.

State-specific exceptions to garnishment limits

Most states use the limits described at the beginning of this section, but there are some exceptions.

• Minnesota and Virginia.
  If the creditor garnishment case is in the state of Minnesota or Virginia, the maximum amount of an employee’s total disposable income that can be subject to garnishment in any work week may not exceed the lesser of:
  • 25% of the employee's disposable income for that week, or
  • The amount by which the employee's disposable income for that week exceeds 40 times the federal minimum wage.
• Illinois. If the creditor garnishment case is in the state of Illinois, the maximum amount of an employee’s total disposable income that can be subject to garnishment in any work week may not exceed the lesser of:
  • 15% of the employee's disposable income for that week, or
  • The amount by which the employee's disposable income for that week exceeds 45 times the federal minimum wage.

Related articles

Garnishment overview

Setting up vendors

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