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Set up and collect garnishments in Online Payroll

SOLVEDby QuickBooksIntuit Online Payroll549Updated 4 weeks ago

Learn how to follow wage garnishment orders using QuickBooks and Intuit Online Payroll.

A garnishment is an order by a court, the federal government, or a state agency, for an employer to withhold wages from an employee's pay and send the money to an agency or creditor. The order might also let you add an administrative fee to the employee.

If you receive a court-ordered wage garnishment order or tax levy for an active employee, you're legally bound to withhold the employee's wages. These orders have specific guidelines that determine the amount you withhold and the way you handle multiple garnishments

Step 1: Determine what type of garnishment you have

The type of garnishment you have will determine how you add it to your QuickBooks.  There are several types of garnishments including:

  • Federal and state tax levies
  • Child or spousal support withholding orders
  • Bankruptcy
  • Federal and state student loans
  • Federal agency debt orders (non-tax)
  • Creditor garnishments

Other names used to refer to a garnishment order include "earnings withholding order," "federal tax levy," "support order," "bankruptcy order," "writ of garnishment," or "garnishment summons."

Step 2: Add the garnishment to QuickBooks

Add a garnishment that is deducted from an employee's disposable income. Follow these steps for your payroll service:

Note: Not sure which payroll service you have? Here's how to find your payroll service.
  1. Go to Payroll then Employees.
  2. Choose the employee's name.
  3. Next to Pay select Edit ✎.
  4. In the deduction section, select Edit ✎ to add a deduction.
  5. Select + Add Garnishment.
  6. In the dropdown menu ▼ select the Garnishment Type.
  7. Enter a description. This will show on your reports and pay stubs. It's a good idea to enter both the employee and agency names so that you’ll recognize which agency is owed the garnishment. 
  8. Enter the following fields based on the garnishment type you chose.
    • Child/Spousal Support
      1. Amount Requested - The amount that will be deducted per paycheck. If allowed by the order, include any administrative fees you add. Note that this amount may decrease once disposable earnings are calculated. 
      2. Maximum % of disposable income - Look for this wording:  "The total withheld amount, including your fee, cannot exceed __ % of the employee's/obligor's aggregate disposable weekly earnings…”.
    • Federal Tax Levy
      1. Amount Exempt  - The amount that appears in the table included in the order.
    • Other Garnishment
      1. Total Amount Owed - The total amount owed from the order. The garnishment will automatically stop when the employee's total amount garnished reaches this amount.
      2. Amount per period - Select whether the amount to be garnished is a percentage of gross pay or a fixed dollar amount. Enter the amount as shown on the order.
      3. Alternate Garnishment Cap -. Look for a withholding limit or cap on the order. This cap must include any administrative fees you add. The total amount withheld for the garnishment can't exceed this cap.
  9. Select Save.
  10. If your employee has multiple garnishments, select the dropdown menu ▼ next to Garnishment weighting to select the order in which the garnishments are collected.
  11. Select Done.

To add a garnishment that is deducted from an employee's disposable income, follow these steps:

  1. Go to Employees, then choose the Employee's name.
  2. In the Deductions & Contributions section, select Edit.
  3. Select New Garnishment.
  4. Select a garnishment type, then enter the required information.
FieldWhat to enter
DescriptionThis description appears on reports and pay stubs. It's a good idea to enter both the employee and agency names so that you’ll recognize which agency is owed the garnishment.
Amount RequestedApplies to Child/Spousal Support orders only. If allowed by the order, include any administrative fee you add. This is the amount that will be deducted per paycheck. Note: this amount may decrease once disposable earnings is calculated.
Maximum % of Disposable IncomeApplies to Child/Spousal Support orders only. Look for the wording: "The total withheld amount, including your fee, cannot exceed __ % of the employee's/obligor's aggregate disposable weekly earnings.
Amount ExemptApplies to Federal Tax Levy orders only. Enter the amount that appears in the table included in the order.
Total Amount OwedApplies to Other Garnishment type only. Enter the total amount owed from the order. The garnishment will automatically stop when the employee's total amount garnished reaches this amount. Note: the garnishment can extend across multiple years.
Amount Per PeriodApplies to Other Garnishment type only. Select whether the amount to be garnished is a percentage of gross pay or a fixed dollar amount. Enter the amount as shown on the order.
Alternate Garnishment CapApplies to Other Garnishment type only. Look for a withholding limit or cap on the order. This cap must include any administrative fee you add. The total amount withheld for the garnishment cannot exceed this cap.

Contact us to set up your wage garnishment.

Step 3: Pay the garnishment to the appropriate agency

You'll need to make the payments directly to the agencies or creditors as instructed in the garnishment order or tax levy.

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