Using the Income Withholding Calculator

Using the Income Withholding Calculator


Hi, I’m Mary. As an employer you may have received one or
more “Income Withholding for Support” notices for an employee. This notice is the official New York State
income withholding order, or IWO, and it requires you to withhold income for child support obligations. You may wonder if the amount to be withheld
is too much in relation to the employee’s earnings. By using the online Income Withholding Calculator
you can see if that is the case. The online calculator is an optional tool
for employers to use to calculate child support withholding in accordance with federal and
New York State laws and regulations. During this video we’ll walk you through two
hypothetical scenarios to show you how to use it. Before we begin let’s look at the calculator,
which you can find on the New York State child support website: childsupport.ny.gov. Click the Employers tab at the top of the
page, then select Calculator. You will find the actual calculator below
the introductory information. It consists of abbreviated instructions, data
fields and buttons. There are three types of data fields-input
fields, drop down menu fields and calculated fields. Input fields, such as Gross earnings per pay
cycle, require you to enter data. Drop-down menu fields, such as Pay cycle,
allow you to select the appropriate option from a list of choices when you click the
downward arrowhead. Calculated fields are shaded gray and their
contents result from data you enter or selections you make in the other two types of fields. Clicking on a button performs an action. For example, clicking the larger buttons after
you have entered data in the fields for that section of the calculator triggers the calculations
in the related calculated fields. Clicking on the large question mark opens
a new window with detailed information on that topic. Located at the bottom of the calculator are
buttons that will allow you to clear the calculator should you make a mistake entering data or
if you want to start again. At any time you can generate a blank calculator
by clicking the NEW CALCULATION or RESET button. Before using the calculator, it is more efficient
to gather all the information you will need about the employee. From the bottom of page one of the Income
Withholding Order in the area labeled Order Information you can find the required amount
of support and the ordered payment cycle, or more simply the payment frequency, for
each category of child support included in the order. If the employee is required to provide health
insurance coverage for the dependents listed on page 1 of the IWO, you also need the amount
the employee pays for the health insurance premium. You would know this if you received a National
Medical Support Notice for the employee. Finally, from your own internal employer records
gather the employee’s payroll deductions. Once you’ve collected this information you
are ready to use the calculator. In our scenario, we have gathered all information
about a hypothetical employee who earns 800 dollars biweekly and has one income withholding
order. Now let’s start our walk through to see how
to use the calculator! We will begin by using the calculator to calculate
the employee’s aggregate disposable income. First, enter 800 dollars in the Gross earnings
per pay cycle field. This is the amount the employee earns before
any deductions. Then, select the Pay cycle from the drop-down
menu. Our employee is paid biweekly, which is every
two weeks. Next, enter the amount of deductions required
by New York State law. In this case, the Federal income tax is 42
dollars and 84 cents; and Social Security tax is 49 dollars and 60 cents. Note that as you enter these amounts you can
use the tab key, located on your keyboard, to advance to the next field with ease. Moving on, the Medicare tax is 11 dollars
and 60 cents, and the State income tax is 21 dollars and 62 cents. In our scenario, there is no City or Local
income tax or Involuntary retirement or pension plan payments deductions, but you may encounter
employees with one or both of these deductions. Involuntary retirement or pension plan payments
do not include any voluntary payments, such as contributions to a 401(k), loans, or judgments
from a collection agency. After entering this data, click the DISPOSABLE
INCOME button. This produces results in two calculated fields:
Total deductions required by law and DISPOSABLE INCOME. In our scenario, the Total deductions required
by law is 125 dollars and 66 cents, and the employee’s DISPOSABLE INCOME is 674 dollars
and 34 cents. As you may already know, federal and state
law limit the amount an employer can withhold from an employee’s earnings for child support. So, the next section of the calculator determines
the Consumer Credit Protection Act, or CCPA, percentage and the maximum withholding amount
allowed based on the employee’s circumstances as well as the aggregate disposable income. The maximum withholding amount is based on
the limitation percentage. The limitation percentage is affected by the
date of the IWO (before August 29, 2018 or after) and other factors. Use the drop-down box to answer the question
‘Any IWO issued on or after August 29, 2018.’ If the date of the IWO is prior to August
29, 2018, there are two questions we must answer to determine limitation percentage. If the date of the IWO is on or after August
29, 2018, there is one question we must answer. In our example, select NO, as the date of
the IWO is prior to August 29, 2018. You’ll see an additional field: “Employee
supports another spouse or child.” Question 1: does the employee owe arrears
greater than 12 weeks on any of the IWOs? Well, the answer to this question is on the
bottom of page one of the income withholding order in the area labeled Order Information. For our scenario choose Yes in the drop-down
menu. Question 2: Does the employee support another
spouse or child besides those listed on the IWO? Note: If the date of any IWO is on or after
August 29, 2018, this question does not apply. To answer this question look to see if the
employee has other income withholding orders. If so, then answer Yes. Otherwise, contact the employee for this information. In our example, select No in the drop-down
menu. Based on the information we’ve provided, the
calculator will generate the CCPA percentage and the Maximum Withholding amount for the
employee. Click the CCPA AND MAXIMUM button to display
the results in those fields. Here you can see the CCPA percentage is .65
or 65 percent, while the Maximum Withholding amount is 438 dollars and 32 cents. The next section of the calculator allows
us to enter information from each income withholding order for the employee and compare it to the
maximum withholding amount. The calculator is preset for 1 IWO, which
is the number of IWOs we have in our scenario. However, there may be times when you have
more than one IWO for an employee. In these cases you would use the drop-down
menu to select the corresponding number of IWOs. For example, if you select 3 IWOs for an employee,
then click the DISPLAY IWOS button, the calculator generates the appropriate number of fields
you’ll need for entering the Total Amount to Withhold from each IWO. IWO 1, IWO 2, and IWO 3. But remember our scenario only has 1 IWO. To get us back to 1 IWO, click the RESELECT
button, then select 1 from the drop down menu. You can also use this function if you select
an incorrect number of IWOs. Here we will enter the Total Amount to Withhold
for your pay cycle. We can find this information on the bottom
of page 1 of the IWO. This employee’s income withholding order tells
us to withhold a total of 256 dollars and 92 cents on a biweekly basis. The payment frequency happens to be the same
as the pay cycle in our scenario, which we entered into the calculator earlier. You may encounter situations where the payment
frequency of the ordered amount differs from your pay cycle. In these cases, select the amount of withholding
that matches your pay cycle from the IWO. You can find this information on page 1 of
the IWO in the area under the label Amounts to Withhold. For example, if the employee is paid on a
monthly basis, you would use 556 dollars and 66 cents rather than 256 dollars and 92 cents. But as we said, in our scenario the pay cycle
is biweekly so we will enter that amount of 256 dollars and 92 cents into the IWO 1 Total
Amount to Withhold for your pay cycle field. If the employee has health insurance coverage
that includes the dependents listed on page 1 of the IWO, enter the premium paid by the
employee. In this scenario, the Health Insurance Premium
is 40 dollars per biweekly pay cycle. After entering these amounts, click the COMPARE
TO MAXIMUM button. This calculation determines our next steps
based on whether the total amount to withhold is more than, equal to or less than the maximum
withholding amount. Once we click the button, the calculator simultaneously
generates the Total of All IWOs and Health Insurance Premium and displays a pop-up window
indicating our next steps. In this scenario, the Total of All IWOs and
Health Insurance Premium is 296 dollars and 92 cents, which is less than the maximum withholding
amount of 438 dollars and 32 cents. The pop-up window in this case, tells us our
calculation is complete. We can stop here and withhold the full ordered
amount. To view the amounts to withhold and remit,
click OK in the pop-up window and scroll down to the Amounts to Withhold and Remit section
of the calculator. Please note that the Withhold for Health Insurance
amount is included in the Total Amount to Withhold. Therefore, the Total Amount to Withhold is
the amount the employer will deduct from the employee’s paycheck. The Total Amount to Remit is the amount the
employer will send to the New York State Child Support Processing Center, the State disbursement
unit. Click PRINT to print the webpage, including
the calculator and any calculations in its entirety. In our first scenario, the amount to withhold
was NOT too much in relation to the employee’s earnings. But what happens when the total amount to
withhold is more than the maximum allowed? To answer this question let’s look at an example
which will give us this result. Let’s say you have an employee for whom you
received two IWOs. In this scenario we will use the same aggregate
disposable income information from our first scenario. Now, we’ll move to the next section of the
calculator: Determine CCPA percentage and Maximum Withholding. As discussed in our first scenario, use the
drop-down box to answer the question ‘Any IWO issued on or after August 29, 2018.’ If the date of the IWO is prior to August
29, 2018, there are two questions we must answer to determine limitation percentage. If the date of the IWO is on or after August
29, 2018, there is one question we must answer. In our example, select NO, as the date of
the IWO is prior to August 29, 2018. As we noted in our first scenario, the information
at the bottom of page one of the IWO indicates that the employee owes arrears greater than
12 weeks. So select Yes as the answer to this question. “Does the employee support another spouse
or child?” Yes. As noted in our first scenario, if the date
of any IWO is on or after August 29, 2018, this question does not apply. At this point, click the CCPA AND MAXIMUM
button to determine the CCPA percentage and Maximum Withholding amount. Now the CCPA percentage is .55 or 55 percent
while the Maximum Withholding amount is 370 dollars and 89 cents. Next, we’ll move to the Compare total ordered
to Maximum Withholding section of the calculator. Notice, that in this section of the calculator
the number of IWOs is preset for one; however in this scenario we have two. Use the drop-down menu to select the corresponding
number of IWOs. Then click the DISPLAY IWOS button to generate
the second field for entering the Total Amount to Withhold for your pay cycle for IWO 2. Remember, you can use the RESELECT button
to reset the number of IWOs if needed. Next, go to the bottom of each IWO to find
the Total Amount to Withhold. Since the payment frequency and our pay cycle
are both biweekly, we will use 256 dollars and 92 cents. Enter that amount into the IWO 1 field. From the second IWO enter 271 dollars and
92 cents into the IWO 2 field. If the employee has health insurance coverage
that includes the dependents listed on page 1 of the IWO, enter the premium paid by the
employee. In our scenario, it’s 40 dollars per biweekly
pay cycle. After entering these amounts, click the COMPARE
TO MAXIMUM button. Remember, this calculation determines our
next steps based on whether the total amount to withhold is more than, equal to or less
than the maximum withholding amount. Once we click the button the calculator simultaneously
generates the Total of All IWOs and Health Insurance Premium and displays a pop-up window
indicating our next steps. In this scenario, the Total of All IWOs and
Health Insurance Premium is 568 dollars and 84 cents, which is more than the maximum withholding
amount of 370 dollars and 89 cents. Because the amount to be withheld cannot exceed
the maximum withholding amount allowed, the pop-up window tells us to continue to the
prorated calculation section of the calculator. There we will enter more detailed information
from each IWO and the calculator will allocate prorated amounts to withhold for each order
so that the total does not exceed the maximum withholding amount allowed. Click OK in the pop-up window and move down
to the Prorated Calculation: Enter Current, Past-Due and Other Amounts from each IWO section
of the calculator. In this section the Pay cycle (selected above)
field is already filled with the choice we made in the Calculate Aggregate Disposable
Income section of the calculator. In this case we chose biweekly for the employer’s
pay cycle. When necessary, the calculator will allow
us to convert the payment frequency to correspond to our pay cycle. Now we’ll need to enter information from the
Order Information section of each IWO. On the first IWO, begin with current child
support. In our scenario, the order requires 100 dollars
biweekly. Enter that amount into the calculator. Since the payment frequency matches the biweekly
pay cycle we do not need to convert it. Next, enter the remaining IWO 1 Order Information
into the calculator. In this case: The past-due child support requires
110 dollars biweekly; No need for conversion. There is no current or past-due cash medical
support in our scenario, but you may encounter employees with one or both of these payments. The current spousal support requires 40 dollars
biweekly; again we do not need to convert the payment frequency for this category. We have no past-due spousal support in this
example, however again you may encounter employees with this payment. The other (payments to a third or fourth party)
requires 15 dollars monthly. For this category we’ll convert, since the
payment frequency is monthly and our pay cycle is biweekly. To do this, use the Convert from… drop-down
menu on the calculator and select Monthly to Biweekly. Next click the CONVERT AND TOTAL IWO 1 button. This calculation will match the Total Amount
to Withhold on the IWO – in our example 256 dollars and 92 cents. Notice how the support amount for Other (third
or fourth party) at 15 dollars with a payment frequency of monthly becomes 6 dollars and
92 cents in the …to Your Amount field on the calculator. This changed because we converted the pay
cycle from monthly to biweekly. Now we’ll need to repeat these same steps
for the second IWO. In this example, the current child support
requires 150 dollars biweekly; we do not need to convert it since it matches our pay cycle. The past-due child support requires 75 dollars
biweekly; again it is not necessary to convert it. There is no current or past-due cash medical
support in our scenario, but remember you may encounter employees with one or both of
these payments. The current spousal support requires 40 dollars
biweekly; we don’t need to convert the payment frequency for this category either. We have no past-due spousal support in this
example, however again you may encounter employees with this payment. The other (payments to a third or fourth party)
requires 15 dollars monthly. As before, we’ll convert, since our pay cycle
is biweekly and the payment frequency is monthly. Again, use the Convert from…drop-down menu
on the calculator and select Monthly to Biweekly. Next click the CONVERT AND TOTAL IWO 2 button. This number will match the Total Amount to
Withhold on the second IWO. In our scenario 271 dollars and 92 cents. Notice how the support amount for Other (third
or fourth party) at 15 dollars with a payment frequency of monthly becomes 6 dollars and
92 cents in the …to Your Amount field on the calculator. Next, in the section below, click the TOTAL
ALL IWOS button to calculate the Total Current Support, Total Past-Due and Other, and Total
All IWOs. In our scenario the Total Current Support
is 330 dollars. The Total Past-Due and Other is 198 dollars
and 84 cents and the Total All IWOs is 528 dollars and 84 cents. The Health Insurance Premium: Amount of premium
field is already filled with the amount we entered earlier when comparing the total ordered
to the maximum withholding amount. Finally, by clicking the CALCULATE WITHHOLDING
button the calculator generates the allocated withholding amounts for each IWO’s Total,
Current, and Past-Due and Other fields. It also calculates amounts for: Withhold for
the Health Insurance, Total Amount to Withhold and Total Amount to Remit. Note that while you can make a single payment
for the two IWOs, you must separately identify the amount to be paid for each New York Case
Identifier. As we can see, the total for all withholdings
no longer exceeds and is now equal to the maximum withholding amount allowed for this
employee. There are some circumstances where the employer
may not withhold the health insurance premium, even when ordered to do so. This happens if the total Current support
plus the health insurance premium paid by the employee for dependent coverage exceeds
the maximum withholding amount. In these cases the amount in the calculated
field Withhold for Health Insurance displays as zero. In this scenario, the total Current support
for the 2 IWOs is 140 dollars plus 190 dollars, which equals 330 dollars. When combined with the health insurance premium
of 40 dollars, the new total becomes 370 dollars, which is less than the maximum withholding
amount of 370 dollars and 89 cents. So in this case the calculated field, Withhold
for Health Insurance displays 40 dollars, which the employer will withhold. Remember, the Withhold for Health Insurance
amount is included in the Total Amount to Withhold. Therefore, the Total Amount to Withhold is
the amount the employer will deduct from the employee’s paycheck. The Total Amount to Remit is the amount the
employer will send to the New York State Child Support Processing Center, the State disbursement
unit. These were just a couple of examples of situations
you could encounter when ordered to withhold a portion of an employee’s income for child
support obligations. Remember, the online Income Withholding Calculator
is a tool you can use any time you need assistance with determining the amounts to withhold or
remit. If you have any questions regarding the online
calculator, please contact us by email at [email protected] Thank you for watching and good luck calculating!

One thought to “Using the Income Withholding Calculator”

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    Pray this prayer sincerely to know your saved

    Jesus, I believe you came to earth, I believe you died on the Cross for my sins. I believe you rose again on the 3rd day and went back to Heaven to prepare a place for Your Children To live with You Forever . Please forgive me of my sins. Clean my heart, white as snow. Come live in my heart, make me a child of the King, a new creature in Christ, in your precious Name I ask this…amen.

     

     

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