How to Calculate Garnishments

A garnishment is a legal procedure that a third party initiates to recover an unpaid debt from a debtor. The garnishee is the party that holds money or property, such as wages or bank account deposits, belonging to the debtor. As the garnishee, you are required to withhold a certain sum from the debtor's property and pay the deducted amounts to the entity listed on the garnishment notice. Though the garnishment order usually states the amount to deduct, learning the standard requirements helps to ensure compliance.

Instructions

1

Calculate ordinary wage garnishments, such as a garnishment that a creditor initiates. Under federal law, you can deduct no more than the lesser of 25 percent of an employee's weekly disposable income or the amount by which the disposable income exceeds 30 times the federal minimum hourly wage. To arrive at disposable income, subtract legally required deductions, such as employment taxes, from the employee's gross pay.

2

Compute support garnishments, such as alimony and child support. Federal law allows you to withhold no more than 50 percent of disposable income if the debtor is supporting a child or spouse outside of the support order, up to 60 percent if he is not, and an extra 5 percent for support payments more than 12 weeks late.

3

Calculate IRS tax levies according to the Internal Revenue Service's instructions. For example, for a wage levy, use the employee's Statement of Exemptions and Filing Status and IRS Publication 1494 to figure the withholding amount.

4

Figure out state tax levies based on your state revenue agency's policies. For example, the Illinois Department of Revenue requires Illinois employers to withhold up to 15 percent of gross wages to pay for back state taxes the debtor owes.