Menu
HARIK THOMPSON CPAs
  • Home
    • About Harik Thompson
    • Team
      • Patricia Bell Harik
      • Kevin Thompson
      • Shylesh Viswanathan
    • Affiliation
  • Services & Industries
    • Accounting Services
    • Business Consulting
    • Entertainment Industry
    • Estates and Trusts
    • Financial Planning
    • International Taxation
    • Tax Strategies
  • Insights & News
    • Santa Monica Office Announcement
    • Principal Announcement
  • Client Resources
    • Client Portal
    • Tax Forms & Resources
  • Payments
  • Contact
  • Home
    • About Harik Thompson
    • Team
      • Patricia Bell Harik
      • Kevin Thompson
      • Shylesh Viswanathan
    • Affiliation
  • Services & Industries
    • Accounting Services
    • Business Consulting
    • Entertainment Industry
    • Estates and Trusts
    • Financial Planning
    • International Taxation
    • Tax Strategies
  • Insights & News
    • Santa Monica Office Announcement
    • Principal Announcement
  • Client Resources
    • Client Portal
    • Tax Forms & Resources
  • Payments
  • Contact

Wage Garnishments: What You Need to Do

4/11/2018

 
There's an official-looking letter on your desk: a court has informed you that a debtor is employed at your firm and you will have to start withholding the employee's pay accordingly. There are instructions for handling this, and a notice that you will be held in contempt if you don't respond.
You will most likely have to determine the amount of garnishable wages for each pay period and withhold those wages as directed by the court order until the judgment is satisfied, or until the court orders you to stop withholding.
You will need to report and distribute the total amount of wages withheld to the creditor or the creditor's attorney, usually within 15 days after the close of the employee's last pay period in the month. If another garnishment is received, you have to follow the same procedure but, of course, that payment goes to a second creditor and cannot be paid until the first garnishment has been paid in full.
In return, you should receive a statement listing the payments that were received and how they are going to be applied to the judgment principal, costs, interest and fees.
Going forward, you will need to tell the court and all related parties if the employee stops working or is fired. The garnishment will typically terminate 90 days after the end of employment, unless you hire the employee back.
You should know that federal law limits the amount of earnings that can be garnished to 25 percent of disposable income or the amount that income exceeds 30 times the federal minimum wage, whichever is less.
If there are problems complying, you may oppose the garnishment by filing a motion in court, and will need a lawyer for that. For example, you may claim that the garnishment sought by the creditor amounts to exempt earnings that belong to the employee. Basically, however, you want to comply and move on, although you are not required to turn over property that's not in your possession or to collect from your employee any tips that were paid directly to the employee by your customers.
This is just an introduction to a complex subject, and state laws may affect some of these rules. The best you can do is read any court orders promptly, follow the instructions, and consult with a professional if you have any questions.

Comments are closed.

    Newsletter articles are posted every 2 weeks. ​

    If you would like to have our e-newsletter delivered directly to your inbox, please sign up. Your information is confidential; you can unsubscribe at any time. Subscribe.

    Categories

    All
    1040-X
    1099 Form
    2024 Numbers
    401Ks And IRAs
    Alternative Minimum Tax
    Annuities
    Appeals
    Apprenticeships
    ASC 606
    Audits
    Automation
    Backup Withholding
    Blockchain
    Bonuses
    Business Accounting
    Business Closure
    Business Deductions
    Business Structure
    Business Taxes
    Business Tips
    Capital Gains
    Cash And Accrual
    Charitable Gifts
    Clean Vehicle Tax Credit
    Commercial Real Estate Vacancies
    Compensation
    Consulting
    Coronavirus Relief Package
    Credit Score
    Crowdfunding
    Debt To Income Ratio
    Deductions
    Depreciation
    Digital Assets
    Dividends
    Dollar Cost Averaging
    Earned Income Tax Credit
    Economic Injury Disaster Loan
    EIN Employee ID Numbers
    EITC
    Employee Classification
    Employee Leave
    Employee Overpayment
    Employee Pay
    Employee Retention Credit
    Employee Taxes
    Employment Taxes
    Estate Planning
    Estates And Trusts
    Estate Taxes
    Executor
    Family Businesses
    Family Leave
    FATCA
    Federal Excise Tax
    Filial Responsibility
    Financial Planning
    Flood Insurance
    Foreign Earned Income
    Fraud
    Fringe Benefits
    Gift Taxes
    Health Care
    Health Savings Account
    HIPAA
    Hiring Compliance
    Hiring Help
    Hiring Tax Credits
    Hobby Vs. Business
    Home Energy Tax Credit
    Home Office
    Homeowners' Deductions
    Income Tax
    Independent Contractors
    Inflation
    Innocent Spouse Rule
    Insurance
    Intangible Assets
    Intestate
    Inventory Management
    Investing
    IRAs
    IRS Disagreements
    IRS Representation
    Isabilities-act
    Key Performance Indicators
    Layoffs
    Lease Accounting
    Leave
    Legacy
    Life Insurance
    Loans
    Managing Employees
    Market Capitulation
    Medicaid Trust
    Medical And Dental Deductions
    Medicare
    Mortgages
    Net Pay
    News
    Nonprofit Entities
    On-Call Pay
    Overtime Exemption
    Pandemic Planning
    Paycheck Protection Program
    Payroll
    Payroll Goals
    Payroll Taxes
    Pensions
    Personal Accounting
    PPP Loan
    Prenup
    Profit Sharing
    Property Taxes
    Quarterly Tax Returns
    Real Estate Taxes
    Record Keeping
    Recovery Rebate Credit
    Referral Program
    Refinance
    Rehiring Staff
    Remote Employees
    Reputation
    Retirement
    Reverse Mortgage
    SBA Loans
    Scams
    Schedule K-2 And K-3
    S Corporations
    Sick Leave Rules
    Social Security
    State And Local Taxes
    Student Loans
    Succession Plan
    Supplemental Wages
    Supply Chain Risks
    Taxable And Nontaxable Income
    Tax Changes
    Tax Debt
    Tax Deductions
    Taxes
    Tax Implications
    Tax Planning
    Tax Tips
    Unemployment Tax
    Unmarried Partners
    W 2 Form
    Wages And Overtime
    Wildfire Solution
    Wills And Trusts
    Withholding
    Work Opportunity Tax Credit
    Year End Tax Considerations

    RSS Feed

Proudly powered by Weebly