Add or remove a garnishment or other post-tax deduction

If you need to deduct money from an employee's paycheck to account for a wage garnishment or other debt, follow the steps below to set up deductions. You can set up a one-time deduction or an ongoing deduction that will be taken every pay period.

Custom deductions are always post-tax. If you need to set up pre-tax deductions instead, click here for next steps.

All deductions start with the next pay period.

If you have questions about a wage garnishment notice or income withholding order, contact the agency that sent you the notice or your accounting professional.

If you've received a court order to enroll dependents in health insurance, head to this article for next steps.

Add a one-time, post-tax garnishment or deduction while running payroll

You can add one-time custom deductions while running a regular payroll. Follow these steps:

Go to the Payroll section and select Run payroll.
Click Run Regular Payroll.
During the first step of payroll, click on the “Actions” menu next to an employee's name to add or edit one-time deductions.
Click Edit deductions.
Click Edit or Add one-time deduction.
- Edit: Update the deduction name, type, or amount, and click Save.
- Add one-time deduction: Name the deduction, select the amount type, enter the amount to withhold, and click Add.
Click Done once all deductions look accurate.

You may be responsible for remitting the deduction to the agency that ordered it—refer to the section below, "What to do with deducted garnishments," for next steps.

Add a post-tax garnishment or deduction from an employee's profile

Another way you can add a post-tax garnishment or deduction is from an employee's profile. Follow these steps:

Click the People section and select Team members.
Click your employee's name.
Scroll to the bottom of the page and click +Add a Garnishment or Custom Deduction.
Select if this is a garnishment or custom deduction (post-tax).
- If you're adding a child support garnishment to a state agency (except South Carolina), we'll pay the collecting agency on your behalf. Scroll to "Child support garnishments" below for next steps.
For all other garnishments select the type from the dropdown menu. For custom deductions, enter a description which will appear on the employee's paystub.
- If you have a child support order from South Carolina, or a US Territory or tribal support agency, select "Garnishment," and choose the garnishment type "Other Garnishment."
  - Add the description "Child Support."
- We'll make these deductions from payroll and leave the money in your company account to pay directly to the collecting agency.
Select if this a recurring or one-time post-tax deduction.
Enter the post-tax deduction amount for each payroll:
- Dollar amount per pay period
- Percentage of disposable income, in which you can also add a maximum dollar amount per pay period
For recurring post-tax deductions, add an annual maximum if applicable.
Click Save & continue.

The next time you run payroll, this amount will be deducted from your employee's wages post-tax. The deduction will be seen as a separate line item on the employee's paystub.

You may be responsible for remitting the deduction to the agency that ordered it—refer to the section below, "What to do with deducted garnishments," for next steps.

What to do with deducted garnishments

Child support garnishments

For all states except South Carolina:

Gusto will make the child support garnishment on your behalf
Gusto deducts the amount of the garnishment from your company bank account

If your company has multiple bank accounts set up, the money will be deducted from the account you used to process that specific payroll

For South Carolina:

Deducted money remains in your company bank account

If your company has multiple bank accounts set up, the money remains in the account you used to process that specific payroll

If you've been ordered to remit garnishments to any agencies, that is your responsibility

All other garnishments (except child support)

Deductions remain in your company bank account

If your company has multiple bank accounts set up, the money remains in the account you used to process that specific payroll

If you've been ordered to remit garnishments to any agencies, that is your responsibility

Remove a post-tax garnishment or deduction

If a garnishment or deduction is no longer needed, follow these steps to stop deducting it from an employee's payroll.

Click the People section and select Team members.
Click your employee's name.
Scroll down to the Deductions headline.
Find the garnishment or deduction you'd like to stop, and click edit.
Determine if you'd like to temporarily or permanently stop the deduction:
- Temporarily stop the deduction: Reduce the "Amount to Withhold" to $0.00 and then click Save and close.
- Permanently stop the deduction: Click Delete this Deduction.

COVID-19 student loan payment pause extended

The student loan payment pause is extended until the U.S. Department of Education (DOE) can implement the debt relief program or the litigation is resolved. Payments will restart 60 days later. If the debt relief program has not been implemented and the litigation has not been resolved by June 30, 2023, payments will resume 60 days after that. The DOE will notify borrowers before payments restart. You can check for updates here.

If employee’s wages have already been garnished in error and you haven't made the payment to the collector yet, you can return those funds to your employee.

Child support garnishments

Primary and Full Access administrators can set up post-tax deductions for an employee's child support wage garnishment.

Set up a child support garnishment

Click the People section and select Team members.
Click your employee's name.
Click Add Garnishment or Custom Deduction.
Select Garnishment as the Deduction Type.
Select Child Support as the Garnishment Type.
Select the state agency listed on the order received in the Agency field.
Select the county listed on the order received in the County field (if applicable).
- Florida, New York and Illinois are the only states that require this.
Enter the CSE Case Number found on the order received.
- Contact the agency directly if the case number is not easy to locate.
- Check the table below for Case ID formatting guidelines per state.
Enter the Total Amount to Withhold found on the order.
- Ensure the amount entered corresponds with the pay period selected in step 10.
Select the 'Per' pay period that corresponds to the amount entered as the Total Amount to Withhold.
- If the pay period differs from the company's normal pay schedule, we'll use the information you entered from the withholding order and your employee's normal pay schedule to determine the per paycheck amount to be withheld.
Click Save & Continue.
The next time you run payroll this amount will be deducted from your employee's wages post-tax.
- The deduction will recur on all payrolls run thereafter until the garnishment has been removed from the employee's profile.
- The deduction will be seen as a separate line item on the employee's paystub.

Legal requirement: Federal rules indicate you may not withhold more than 50% of the disposable income if your employee is supporting another family, or 60% of the disposable income if your employee is not supporting another family. If your employee is behind in their child support payments (in "arrears") greater than 12 weeks, those limits can increase to 55% and 65%. Check the income withholding order to see if it indicates that your employee is in arrears for greater than 12 weeks. State maximum withholding requirements can vary from federal guidelines so contact the state directly for more information.

Case ID formatting

Not all states have provided case ID formatting guidelines.

State	Case ID formatting
Alabama	Enter Case ID exactly as shown on the child support order.
Alaska	Enter Case ID exactly as shown on the child support order.
Arizona	Case ID is 12 digits and is numeric only.
Arkansas	Case ID is 9 digits—court docket numbers cannot be used to identify a case.
California	Case ID is 12-15 digits (numeric). Do not enter dashes.
Colorado	Must include the 8-digit Case Identifier Number or the Child Support Family Support Registry (FSR). Do not report the court number, which is much longer and includes a JV or a DR in the middle. Do not report under the SSN since employees can have multiple cases.
Connecticut	Case ID is the employee’s SSN. This is a mandatory field.
Delaware	Enter Case ID exactly as shown on the child support order.
District of Columbia	Employee’s case number—10 digits.
Florida	Case ID is 13 digits (employee’s remittance ID/depository number). This number can be located on the employee's Income Deduction Order.
Georgia	Case ID is 9 digits, all numeric—Not the SSN, FEIN or docket number.
Hawaii	Do not use asterisks (*) and backslashes (\).
Idaho	Case ID is 6 digits in length and must contain any leading zeros.
Illinois	Do not use the Case ID that start with a "C.” Use the Order ID, Docket ID or Remittance ID (usually starts with a year). It can be up to 17 characters, and is alphanumeric.
Indiana	All numeric with leading zeros is 10 digits. Without leading zeros, it can be 4 to 7 digits long. Payments will process correctly with or without the leading zeros.
Iowa	Case ID is all numeric.
Kansas	Case ID is 12 digits and is a mandatory field.
Kentucky	Enter Case ID exactly as shown on the child support order.
Louisiana	Enter Case ID exactly as shown on the child support order.
Maine	Enter Case ID exactly as shown on the child support order.
Maryland	Case ID is 9 digits—numeric only.
Massachusetts	Case ID is 9 digits.
Michigan	9-digit Case ID number OR 10-digit Order ID number.
Minnesota	Use either the MCI number (10 digits) or case number (12 digits). Exclude any dashes. Include the preceding zeros. Usually ends with 01, 02, or 03.
Mississippi	Use the 9 numeric digits known as the METSS case number. Do not include any of the following: special characters, letters, or the word METSS.
Missouri	Case ID is 8 digits number—numeric only.
Montana	Case ID is 7 digits.
Nebraska	Enter Case ID exactly as shown on the child support order.
Nevada	Case ID is 10 characters—9 numbers, with one alpha at the end (usually an A or B).
New Hampshire	Enter Case ID exactly as shown on the child support order.
New Jersey	Case ID is 2 letters (always cs), 8 numbers, and a letter.
New Mexico	Case ID should never have any alpha character.
New York	NYS child support account number is required: 2 Letters 5 Numbers 1 Letter 1 Number.
North Carolina	MPI number is in the MPI. Leading zeros are not required. No letters.
North Dakota	Case ID is numeric only and can be up to 10 digits.
Ohio	SETS case number: 10-digit case identifier that begins with the number “7.” Order Number: Length varies. The court order identifier immediately follows the Case Number.
Oklahoma	Case ID is 12 digits—numeric only. Case remittance ID or family group number: “FGN” on IWO. 000######, and an additional extension that usually end in 001, 002, 003, etc.
Oregon	starts with a zero and ends with 41
Pennsylvania	Case ID is numeric only.
Rhode Island	Enter Case ID exactly as shown on the child support order.
South Carolina	Enter Case ID exactly as shown on the child support order.
South Dakota	Case ID is alphanumeric—9 numbers followed by a letter.
Tennessee	Case ID is alphanumeric—9 digits long.
Texas	Case ID is 10 digits starting with a zero or an “N.”
Utah	Case ID is 10 digits—will always start with the letter “C” are followed by 9 numbers.
Vermont	Case ID is 10 digits—first 9 digits are SSN.
Virginia	Enter Case ID exactly as shown on the child support order.
Washington	Enter Case ID exactly as shown on the child support order.
West Virginia	Case ID is numeric only.
Wisconsin	Case ID is always numeric—can be 4 to 7 seven digits. Might be referred to as the remittance ID or the KIDS Participant PIN on the state withholding order.
Wyoming	Case ID is numeric only.

Garnishment payments

When to remit payments to state agencies yourself

If the garnishment came from the state of South Carolina, a tribal support agency, or a US territory, you must remit all employee deductions to the agency directly.
If the garnishment was collected on an off-cycle payroll.

To remit a payment yourself, follow the instructions on the garnishment order or contact the agency directly for assistance.

When Gusto remits payments to state agencies for you

As long as the garnishment did not come from South Carolina, a tribal support agency, or a US territory, here's when Gusto will remit payments to the applicable state agency for you:

Regular payrolls
Transition payrolls (as a result of a pay schedule change)
Dismissal payrolls

Agency payment timeline

Garnishment payments are sent to most state agencies 2 business days after the check date of the applicable payroll. Alabama child support agency payments are made 5 business days after the check date.

Bank transactions

In addition to the usual payroll debits (net pay, taxes, reimbursements), all child support garnishments will be summed together and will appear as a separate debit and bank transaction line item in the company's bank account.

Past-due payments (payments in arrears)

If a garnishment order states there is a 'payment in arrears' owed due to missed payments in the past, the agency will generally have already incorporated the past-due amount owed in their calculations of the 'Total Amount to Withhold' along with the employee's current child support liability.

If there are past due amounts owed outside of what is included in the “Total Amount to Withhold,” reach out directly to the agency to determine the best method for making the past due payment on behalf of the employee.

Lump-sum payments

A lump-sum payment is a one-time payment to an employee. Examples include bonuses, commissions, severance, and vacation payouts. For employees with active child support orders, some lump-sum payments may be subject to garnishment. Requirements vary by state and payment type, and Gusto does not automatically calculate these garnishments on bonuses and other lump-sum payments. Employers should confirm the garnishment amounts and verify with the child support agency. Learn more about lump-sum payments and state requirements here.

Calculation, reporting, and viewing deductions

Gusto's deduction calculation

We'll use the information you entered from the withholding order and your employee's normal pay schedule to determine the per paycheck amount to be withheld. Learn more about Gusto's deduction calculation here.

Reporting and viewing deductions

As an administrator you can view deductions in several ways:

When running payroll
In payroll reports
In an employee's profile
On an employee's paystubs
In the 'agency payments' report

Employees can view their deductions:

On their paystubs
In the Job & Pay tab of their employee profile under the Deductions headline

Reversing a payroll with a child support garnishment

Garnishment payments are sent to agencies 2 business days after the check date of the applicable payroll. Once payment has been remitted, we cannot recoup the funds on your behalf. Please directly contact the agency for questions about how to do so and next steps.

If an additional payroll is run to correct for the reversed one, garnishment deductions will occur again if deductions are enabled within the payroll.

Dismissing or rehiring an employee with a garnishment

Dismissing or terminating an employee with a garnishment

Legal Requirement: If you dismiss an employee with a garnishment order for any reason, you are required by law to notify the agency of the dismissal immediately. State guidelines vary but it is recommended you contact the agency 5 days after you learn that an employee will terminate employment or within 5 days after termination, whichever occurs earlier.

This form from the U.S. Department of Health & Human Services is accepted as fulfillment of the termination requirements for some states but not all. States may require additional information or specific employer action. Check out our article on dismissing or terminating an employee with a garnishment for more info.

Rehiring an employee with a garnishment

When rehiring an employee all previous garnishments will be deactivated and will need to be re-entered in the employee's profile per the issued court order. Notification of the rehire may be required by the state.

Employer responsibility

Employers must adhere to several requirements once a child support order has been issued. Your responsibilities may include:

New hire and rehire notification

When you hire or rehire someone in Gusto, you have the option for Gusto to file the new hire report on your behalf.

Verification of employment
Medical support orders
Garnishments on lump sum/bonus payments
Income withholding. Gusto will calculate the withholding according to steps 9 and 10 that you completed above when setting up the order in Gusto, but double-check that the garnished amount matches the child support order.
Remitting payment(s) to the agency. As long as you enter the deduction in Gusto as a child support garnishment and include the state agency, Gusto automatically makes the child support payments in all states except South Carolina.
Notification to the state of an employee's dismissal

Click here for the full list of requirements as outlined by the US Department of Health & Human Services.

Injured employees with active garnishment orders

If an employee has been injured or is ill and unable to work, you should notify the court or agency that sent the withholding notice and provide the employee’s name and the name and address of any entity paying workers’ compensation or disability benefits.

If none of the benefits are being paid by the employer, the employer is usually not responsible for withholding. If you have questions about withholding responsibility, please reach out directly to the agency.

Duplicate or multiple child support orders

If you receive duplicate child support garnishment orders orders (the same child) for an employee there may be additional steps required before taking any action in your Gusto account.

Employers that receive a duplicate withholding order must:

Continue to honor the first order received
Give a copy of the second order to the employee
Contact the agency or court that sent the second withholding order to advise that current support payments are already being sent for the same child to another jurisdiction and to provide the payment information and details.
Contact the agency or court that sent the first withholding order to inform them of the second order.
Confirm if any any additional action is required

Multiple garnishment orders

You may receive multiple orders pertaining to income withholding for an employee. If so, it is important to note that income withholding orders are not to be paid on a first-come, first-served basis.

Reminder: Gusto calculates the "Maximum Paycheck Percentage (MPP)" on a per garnishment basis, not the total amount garnished. As an example:

Situation: an employee has two garnishments, both with a MPP of 50%. Their disposable income after taxes is $2087.20.

Garnishment 1 deduction = $875

Garnishment 2 deduction = $925

Outcome: because both of these numbers are on their own less than 50% of the disposable income ($2087.20 / 2 = $1043.60), Gusto will withhold the full deduction amount for each garnishment, totaling $1800 ($875 + $925).

If there is insufficient allowable disposable income to pay the full amount on all orders, employers must follow the allocation method of the employee's work state, or principal state of employment, to determine how much to pay on each order. A majority of states give priority to current child support orders but regulations may vary.

For specific questions about multiple garnishment orders received and how to allocate disposable income appropriately, please reach out to the agency in the employee’s work state.