July 20, 2015

Denver Tax Attorney   Garnishing Wages: How Much Can They Take From An Employee?IRS Wage Garnishments: How Much Can They Take From An Employee?

A wage garnishment, also known as a wage attachment, is a court or government agency order sent to an individual’s employer, requiring the employer to withhold a specific amount of money from an employee’s paycheck. The money is collected and directly sent to a creditor.

When it comes to IRS wage garnishment, there are limits on just how much a creditor can take or garnish from a person’s paycheck in order to repay debts. The idea behind the limits on wage garnishment is that the debtor should be able to have enough money left to pay for his or her living expenses.

Certain Limits

Colorado follows the limits set by the federal government. Although states are free to execute stricter wage garnishment limits, Colorado has not opted to do so. According to federal law, creditors are generally permitted to garnish twenty-five percent of an individual’s weekly disposable earnings. If an individual has low income and is facing wage garnishment, the statute provides a sliding scale to determine a smaller garnishment percentage for him or her.

“Disposable earnings” refer to wages left after the employer has made required legal deductions, such as child support, income taxes, and Social Security deductions.

Multiple Garnishments

What happens if there is more than one garnishment? In most instances, the maximum amount for ordinary garnishments in Colorado is limited to twenty-five percent in any pay period or workweek—regardless of the total number of creditors or garnishment orders there are.

If, for example, the federal government is garnishing twenty percent of an individual’s income, then the employer can only take another five percent of the income to send to the second creditor if there is another wage garnishment order.

Colorado Garnishments

It must be noted that the state allows for a higher percentage of wage garnishment for certain debts and circumstances. These include:

  • Sixty percent for spousal or child support if the individual is not currently supporting a family
  • Fifty percent for spousal or child support if the individual is presently supporting a family but is ordered to support a former spouse or child
  • An additional five percent if the individual is over 12 weeks behind in support payments
  • Thirty-five percent for any debts stemming from public assistance obtained fraudulently

If an employer has multiple orders and the employee does not have enough disposable earnings to make all these payments, then the employer must allocate the orders according to a priority of support due. The priority is typically current monthly support and maintenance, medical support with a specified amount, retroactive debts or arrears, and orders for maintenance only.

Certain types of income are not subject to a wage garnishment in Colorado, including social security, social security disability, workers compensation, unemployment insurance benefits, retirement or pension benefits, and tax refunds. However, some or all of these income types may be garnished for spousal or child support, repayment of public assistance, and debts to specific local and state government agencies.

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