Child Support and Bonus
dmosson
6 Posts
I have been searching all morning - and what I have been able to find on this topic isn't providing me with enough comfort to do what my employee wants me to do.
Employee will be receiving a significant amount in Bonus soon and is asking me to increase the amount of his Fed & State tax from the norm of 25% and 3% to 30% and 5% respectively. Obviously he is trying to reduce the amount of child support that would be calculated at 28%. Can I allow him to do this?
Employee will be receiving a significant amount in Bonus soon and is asking me to increase the amount of his Fed & State tax from the norm of 25% and 3% to 30% and 5% respectively. Obviously he is trying to reduce the amount of child support that would be calculated at 28%. Can I allow him to do this?
Comments
Bonuses are taxed differently than normal pay, that is, when processing through payroll a standard 25% Fed Tax and 3% State Tax is deducted - the W4 doesn't matter.
Let me present this scenario since I've run the numbers, and perhaps this will put things into perspective:
Bonus: $15,000
25% Fed Tax: 3,750
3% State Tax: $450
28% Child Support (calculated after tax): $3,024
If Employees changes tax:
30% Fed Tax: $4,500
5% State Tax: $750
28% Child Support (calculated after tax): $2,730
The recipient of child support receives less of the bonus payment. What's to stop the employee from requesting 50% Fed Tax and 10% State Tax? I just want to make sure there is no legal ramification for doing this as it concerns child support.
I have looked at the Support Order and there is no reference to bonus payments at all. The Support Order is dated 6/25/2002 and is hand written! I suppose I can call the State Disbursement Unit, just hesitant to pose this question to them...
However, that being said, we allow our ee's to change their personal W-4 information any time and as many times as they wish to do so.
Good luck...
He is asking if I can even withhold as much as 50-75% Fed Tax and 7% State - that would really reduce the amount of child support.
I have the support order and it clearly shows the amount to deduct per pay period, then in fine print, that there may be additional child support due for bonus, commission, etc. The order instructs me to call the agency if any question as to the amount. Check your support orders - I'm sure there is something stated to that affect.
Yesterday, the employee brought me a copy of his divorce decree and it specifically references bonus payments and that he would have to pay 28% child support from the net bonus amount.
So I still have this situation here that I need to deduct 28% from his bonus for child support after taxes. I have been searching and searching to no avail. There would probably never be a problem unless he ended up back in court and they looked at his W2 earnings to see whether or not he is living up to the 28% child support.
I'm still not really sure what the problem is, in terms of him "not living up to the 28% child support". If you allow him to change his tax withholding, the amount you withhold is still going to be 28% of the after-tax amount. If the court were to ask to see the records, all it would reflect was that there was a certain amount of tax taken out and that the 28% had been calculated on the after-tax amount. Since the 28% is based on the net pay and not the gross, all the court would have to look at would be what the amount of the bonus was and how much was paid in taxes, and then verify that the amount calculated was indeed 28% of the after-tax amount.
Pretend you know nothing of his divorce/child support situation...if another employee came to you and wanted to change their withholding, would you ask them for all the details of why they wanted to change it and be the one to make the call as to whether or not you were going to allow them to have more taxes withheld, or would you just go ahead and make the changes they had requested?