Indiana's Income Withholding Law

Income withholding orders are the most convenient way to ensure that child support is regularly paid. Indiana's income withholding law applies to all employers/income payors regardless of size. An 'income payor' means an employer or other person who owes 'income' to an obligor and 'income' means anything of value. An Income Withholding Order (IWO) is for child support only. The income withholding law permits child support enforcement offices operating under the Title IV-D Child Support Program to require any employer to withhold current and delinquent child support obligations from an employee's earnings. The amounts withheld must be submitted to the Indiana State Central Collection Unit (INSCCU). The income withholding law also applies to payments owed to independent contractors. To view the Indiana state statute click IC 31-16-15. Below are answers to questions employers may have with respect to the law.

Why Use Gross For Child Support Thats Not Real Money

As a general rule, a trial court may not consider financial assistance from family or friends in determining a party’s ability to pay alimony or child support. An exception applies allowing the court to impute income for alimony or child support purposes based on gifts if the gifts are consistent and ongoing. For the purposes of a child support worksheet, gross income for each parent should be calculated on a monthly basis and must include, but is not limited to, income from the following sources: 1. Commissions, fees and tips. Income from Self-employment. Under federal law, if a court orders that your wages be garnished to satisfy any debt except child support or alimony, a maximum of roughly 25% of your net wages can be taken. For unpaid child support, however, up to 50% of your net wages can be garnished, and up to 60% if you're not currently supporting another dependent. I have 2 kids for my husband. He cheated on me and was courted ordered to pays 656 for the 1year old child he hashe has another child who he gives 280 to a month but it’s not court ordered. If we separate and I happen to put him on child support will the 1 year old child support stay the same or will the amount change to be able to.

Why is an income withholding order (IWO) necessary?
An IWO assists non-custodial parents as well as custodial parties by ensuring that child support is paid regularly and that an official record of the payment is created.

How is the obligation to withhold income initiated?
The employer will receive a written income withholding order from a court or a Title IV-D child support agency.

What information is on the income withholding order (IWO)?
The IWO states:

The name of the employee and, if appropriate, that the employee is in arrears in the payment of child support.
The total amount to be withheld each pay period from the employee's income. This amount may have to be computed using the conversion table included with the order.
The agency to which the amount withheld must be sent.
That the withholding of income must continue until:
1. Further notice is received from the court or a child support agency; or
2. The employee is terminated from employment.

When must income withholding begin?
Withholding must begin no later than the first pay period occurring within 14 days after the date the income withholding order was mailed, faxed, or personally served on the employer. The employer is then required to withhold and forward the proper amount each time the employee is paid.

What if an employer has more than one employee that has a child support order?
An employer with 50 or more employees and more than one employee has a child support order, is required to submit payments electronically to the Indiana Central Collection Unit (INSCCU). For more information, please visit Payment Processing and Income Withholding For Employers. Employers may also contact the Employer Maintenance Unit (EMU) for any questions concerning child support payments at (317) 232-0327 or (800) 292-0403 or at EMU@dcs.in.gov.

What is the maximum amount under the Consumer Credit Protection Act (CCPA) that may be withheld for child support each pay period from the employee's pay?
The permissible limit on withholding under the CCPA depends upon the employee's current dependents and prior support obligations. A 'dependent' means there is a child (other than the child for whom child support is ordered) and/or spouse for whom the employee has financial responsibility. 'In arrears' means the non-custodial parent owes past-due, unpaid support.

CCPA Limit Scenario
50% If the non-custodial parent has other dependents and owes no arrearage
or is less than 12 weeks in arrears.
55% If the non-custodial parent has other dependents and is over 12 weeks in
arrears.
60% If the non-custodial parent has no other dependents and owes no arrearage
or is less than 12 weeks in arrears
65% If the non-custodial parent has no other dependents and is over 12 weeks
in arrears

In most instances, the maximum percentage of disposable income earnings subject to withholding for the employee will be specified in the income withholding order (IWO). In the event that the IWO does not specify the applicable percentage to be withheld from the employee's pay, the employer may be required to obtain this information from the employee.

What are 'disposable earnings'?
Disposable earnings, as defined under the CCPA, are the earnings left after all deductions required by law are taken from the employee's wages, which include amounts withheld for income taxes and social security. Amounts withheld from earnings at the request of the employee or through an agreement with a labor union (union dues) are included in disposable earnings because the law does not require these deductions. In determining the maximum amount subject to child support withholding, any garnishments presently being deducted are also included as disposable earnings.

Example:
An employee's gross wages for the week are $250.00. From this amount, the employer withholds $40.00 in federal, state, and local taxes; $20.00 in social security taxes; $10.00 in union dues; $50.00 for insurance and $5.00 for the United Way. The employee has no spouse or other dependent children other than the one whom the support has been ordered and is not more than 12 weeks behind in the payment of support.

The employee's disposable earnings for the week are $190.00. $250.00 less $60.00 with the $60.00 equaling the sum of federal, state, and local taxes plus social security. The maximum amount that may be withheld from the employee's check to comply with the child support withholding law is $114.00 (60% of $190.00).

What if the employee already has other assignments of garnishment on his or her income?
The CCPA establishes withholding limits for child support that are different from the limits established under the law for other garnishments. While the total amount withheld from the disposable earnings may never exceed the permissible percentage limit as set by the CCPA , child support withholding orders take priority over any other claim (secured or unsecured) on income except claims for current federal, state and local taxes. If, in complying with all child support withholding requirements, an employer has exceeded the 25% of disposable income limitation applicable to business garnishments under Indiana law and the CCPA, the business garnishment cannot be honored. If the income withholding order does not exceed the 25% limitation, the difference between what is withheld for child support and 25% of the employee's disposable income could be applied to a business garnishment.

Example:
An employee is subject to a child support order in the amount of $100.00 per week and also a business garnishment. If the disposable income is $500.00 per week, the child support obligation represents 20%. Because child support takes priority, the withholding of the full amount occurs first, leaving 5% of disposable income, or $25.00, which can be applied to the business garnishment. However, if the disposable income is $400.00 in this example, the child support obligation would represent 25% of disposable income and the business garnishment cannot be deducted from his pay.

Why Use Gross For Child Support Thats Not Real Money